This is a question anyone thinking about selling must ask. Should they sell now or should they wait for the spring? Most years that would be an interesting question. There is a belief that many buyers come out in the spring and, with that increase in demand for housing, prices may appreciate. This year is unlike any year in recent memory. Most experts believe there will be continuing depreciation of home values throughout the next 18 months.
As we posted on recently, there may be a window of opportunity throughout the rest of 2010 as the banks try to straighten out the paperwork on thousands of foreclosures. Once that paperwork is corrected, the flow of distressed properties coming to the market at discounted prices will begin again.
This was mentioned in the latest Home Price Expectation Survey. Robert Shiller, MacroMarkets co-founder and chief economist said this:
“Over the past month, the average projection for 2010 nationwide home price performance improved slightly among our experts, but for each year thereafter it deteriorated. One plausible explanation for this month’s more negative overall sentiment is recent news concerning foreclosure processing questions and the related possibility of extending the supply pipeline.”
Other experts are also reporting that prices will soften next year
In October’s RPX Monthly Housing Market Report, CEO Michael Feder commented:
“We are at a flex point in housing valuation. With record supply, already paltry demand and systemic threats to a possible correction, we remain terribly concerned about forward home prices.”
The very next day, in a special release, Clear Capital reported a “sudden and dramatic” drop in U.S. home prices:
Most recent data shows a two-month 5.9% price decline representing a magnitude and speed of decline not seen since March 2009; similar declines for September and October expected to appear in other industry indices in coming months.
Bottom Line
If you plan to sell within the next year, you shouldn’t wait for the spring market. Price the home at a compelling price to make sure it sells in the next sixty days.
Friday, October 29, 2010
Thursday, October 28, 2010
4 Tips When Applying For a Mortgage
As underwriting guidelines for lenders become more stringent, it becomes clearer what a good mortgage application looks like. As prospective home buyers begin their search, there are a few things they can do to help get their loans approved (and with the best possible terms), and, at the same time, lessen some of the stress that goes along with the mortgage process.
1.) Income Documents
Most lenders want to see a full month of pay stubs and two year’s complete Federal Tax Returns. Assembling them ahead of time and holding on to every pay stub you get is a good idea that will save you time later. Moreover, looking at those documents and being prepared to explain any deductions that show up is crucial. Child support, alimony, garnishments, and Unreimbursed Employee Expense are often crippling factors that, if explained and dealt with upfront, can make your loan approval smoother.
2.) Asset Documents
Most lenders will scour your bank accounts for the two months prior to going to contract. They are looking for large deposits because they can signal a new loan that wouldn’t show up on your credit report yet. What’s a “large deposit”? Typically, any deposit that would represent more than your representative income. If you make $5000 a month, after taxes you likely net $3800 (or $1900 a bi-weekly pay period); therefore, deposits in excess of that will need to be explained and documented. Sold a motorcycle? Have a paid receipt and motor vehicle documents in place. Got a gift? You will need a Gift Affidavit, proof of the donor’s ability, and transfer of the funds. Any and all questions should be discussed with your loan officer.
3.) Credit Score Optimization
Do your best to curtail your use of credit as it relates to your available credit lines. Target a cap of 30% of usage of available lines to get the best scores. Do NOT cancel credit card, as that will lower your amount of available credit, thereby raising your percentage of usage. That will damage your score. Do NOT shop for a car, explore life insurance, look to get a new credit card, or increase the limits on your current cards because the running of your credit by people in other industries will also lower your credit score. Most importantly, don’t do anything that will require having your credit run without first discussing it with a mortgage professional who knows the impact it could have.
4.) Appraisal Concerns
It’s unlikely you will make an offer to purchase without checking out comparable home sales. It’s also likely you received that type of data from the real estate agent you are working with. Make sure your agent prepares the same information for the appraiser. Data about similar sales, similar homes currently available, and maybe even cost estimates for any repairs or improvements anticipated can preempt future problems with appraised values and conditions.
Overall, it is recommended that you hold onto copies of everything financial, think before allowing your credit to be run, and you work with an agent and loan officer who can use their experience to put your loan application in its best possible light…as soon as you start thinking about buying a home.
1.) Income Documents
Most lenders want to see a full month of pay stubs and two year’s complete Federal Tax Returns. Assembling them ahead of time and holding on to every pay stub you get is a good idea that will save you time later. Moreover, looking at those documents and being prepared to explain any deductions that show up is crucial. Child support, alimony, garnishments, and Unreimbursed Employee Expense are often crippling factors that, if explained and dealt with upfront, can make your loan approval smoother.
2.) Asset Documents
Most lenders will scour your bank accounts for the two months prior to going to contract. They are looking for large deposits because they can signal a new loan that wouldn’t show up on your credit report yet. What’s a “large deposit”? Typically, any deposit that would represent more than your representative income. If you make $5000 a month, after taxes you likely net $3800 (or $1900 a bi-weekly pay period); therefore, deposits in excess of that will need to be explained and documented. Sold a motorcycle? Have a paid receipt and motor vehicle documents in place. Got a gift? You will need a Gift Affidavit, proof of the donor’s ability, and transfer of the funds. Any and all questions should be discussed with your loan officer.
3.) Credit Score Optimization
Do your best to curtail your use of credit as it relates to your available credit lines. Target a cap of 30% of usage of available lines to get the best scores. Do NOT cancel credit card, as that will lower your amount of available credit, thereby raising your percentage of usage. That will damage your score. Do NOT shop for a car, explore life insurance, look to get a new credit card, or increase the limits on your current cards because the running of your credit by people in other industries will also lower your credit score. Most importantly, don’t do anything that will require having your credit run without first discussing it with a mortgage professional who knows the impact it could have.
4.) Appraisal Concerns
It’s unlikely you will make an offer to purchase without checking out comparable home sales. It’s also likely you received that type of data from the real estate agent you are working with. Make sure your agent prepares the same information for the appraiser. Data about similar sales, similar homes currently available, and maybe even cost estimates for any repairs or improvements anticipated can preempt future problems with appraised values and conditions.
Overall, it is recommended that you hold onto copies of everything financial, think before allowing your credit to be run, and you work with an agent and loan officer who can use their experience to put your loan application in its best possible light…as soon as you start thinking about buying a home.
Thursday, October 21, 2010
Home Are Leveraged Too!
Some people define leverage as using other people's money but another way to describe it is when a small down payment controls a large asset by placing a high loan-to-value mortgage on it. There are not many investments that allow leverage but homes certainly do and especially with FHA or VA loans.
Let's assume a couple has the down payment and good credit that would allow them to buy a home. We'll compare some alternatives to see where their best outcome may be.
If a person put $6125 in a certificate of deposit that earned 2% annually, it would be worth $6,762 in five years and the profit would be taxed as ordinary income. If a person could take a little more risk and pick the right stock, the $6,125 might grow to $7,817 and the profit would be taxed at favorable long-term capital gains rates if they held the stock for more than one year.
On the other hand, if the $6,125 were used as a down payment for a $175,000 home that went up in value only 1% per year, the equity would grow to $30,575 in the same five year period of time based on appreciation and amortization. In most cases, the gains on principal residences are excluded from income tax subject to limits.
The difference is dramatic and is one more reason that buyers should be taking advantage of the great selection of homes, the lower prices and incredibly low interest rates to fix thier cost of housing for years to come. There may never be a better time to buy a home than now.
Reprinted from the Pat Zaby blog
Let's assume a couple has the down payment and good credit that would allow them to buy a home. We'll compare some alternatives to see where their best outcome may be.
If a person put $6125 in a certificate of deposit that earned 2% annually, it would be worth $6,762 in five years and the profit would be taxed as ordinary income. If a person could take a little more risk and pick the right stock, the $6,125 might grow to $7,817 and the profit would be taxed at favorable long-term capital gains rates if they held the stock for more than one year.
On the other hand, if the $6,125 were used as a down payment for a $175,000 home that went up in value only 1% per year, the equity would grow to $30,575 in the same five year period of time based on appreciation and amortization. In most cases, the gains on principal residences are excluded from income tax subject to limits.
The difference is dramatic and is one more reason that buyers should be taking advantage of the great selection of homes, the lower prices and incredibly low interest rates to fix thier cost of housing for years to come. There may never be a better time to buy a home than now.
Reprinted from the Pat Zaby blog
Tuesday, October 19, 2010
5 Reasons To Sell right Now
Selling your house in today’s market can be extremely difficult. It is for that reason that every seller should take advantage of each and every opportunity that appears. Each fall, such an opportunity presents itself. This fall, that opportunity may be just too good to pass up.
Below are five reasons you should consider pricing your house to sell in the next 90 days. Meet with your real estate agent and mortgage professional today and see whether it is the right move for you and your family.
1. Entering this time of year, the buyers are more serious.
We all realize that buyers are not quick to pull the trigger on the purchase of a home today. There is no sense of urgency with the supply of eligible properties at all time highs. However, at this time of year, the ‘lookers’ are at the stores doing their holiday shopping. The home buyers left in the market are serious and are more apt to make a purchasing decision. Less showings – but to more motivated purchasers.
2. If you are moving up, you can save thousands.
The Chicago Tribune stated in an article last week that sellers who want to ‘trade up’ should act now:
It could be a bigger house, different neighborhood or a better school district, but it comes with a higher price tag. Do the math; this might be the right time.
A home that was once worth $300,000 may now be worth $240,000 in a market where prices have fallen 20 percent. Wow, you think, the seller is taking a bath. But that seller may also be a prospective buyer who wants a house that once was valued at $400,000. With an equivalent market drop and a realistic listing price, that house may now sell for $320,000. So, in effect, the person is losing $60,000 on the sale of one home but coming out ahead $20,000 on the purchase of another.
Keep in mind the spread may be even greater. There’s a smaller pool of potential buyers for more expensive homes, so sellers may be more willing to cut their price to get a deal done.
3. Interest rates just fell again – to 4.19%.
Professor Karl E. Case, the founder of the Case Shiller Pricing Index in an article in the New York Times last month actually did the math for us:
Four years ago, the monthly payment on a $300,000 house with 20 percent down and a mortgage rate of about 6.6 percent was $1,533. Today that $300,000 house would sell for $213,000 and a 30-year fixed-rate mortgage with 20 percent down would carry a rate of about 4.2 percent and a monthly payment of $833 … housing has perhaps never been a better bargain.
5. You have less ‘discounted’ inventory with which to compete.
This year, sellers of non-distressed properties have been given an early holiday present. With banks declaring a suspension on the sale of many distressed properties (foreclosures), there has been a large supply of discounted properties removed from competition. No one knows how long this self imposed moratorium will last. However, while it does, every homeowner has a better chance of selling their property.
Bottom Line
If you are looking to sell in the near future, there may not be a more opportune time than this fall. Serious buyers, great move-up deals and less competition from foreclosures creates the perfect selling situation. Don’t miss it!
Reposted from Real Estate Matters Blogsite
Below are five reasons you should consider pricing your house to sell in the next 90 days. Meet with your real estate agent and mortgage professional today and see whether it is the right move for you and your family.
1. Entering this time of year, the buyers are more serious.
We all realize that buyers are not quick to pull the trigger on the purchase of a home today. There is no sense of urgency with the supply of eligible properties at all time highs. However, at this time of year, the ‘lookers’ are at the stores doing their holiday shopping. The home buyers left in the market are serious and are more apt to make a purchasing decision. Less showings – but to more motivated purchasers.
2. If you are moving up, you can save thousands.
The Chicago Tribune stated in an article last week that sellers who want to ‘trade up’ should act now:
It could be a bigger house, different neighborhood or a better school district, but it comes with a higher price tag. Do the math; this might be the right time.
A home that was once worth $300,000 may now be worth $240,000 in a market where prices have fallen 20 percent. Wow, you think, the seller is taking a bath. But that seller may also be a prospective buyer who wants a house that once was valued at $400,000. With an equivalent market drop and a realistic listing price, that house may now sell for $320,000. So, in effect, the person is losing $60,000 on the sale of one home but coming out ahead $20,000 on the purchase of another.
Keep in mind the spread may be even greater. There’s a smaller pool of potential buyers for more expensive homes, so sellers may be more willing to cut their price to get a deal done.
3. Interest rates just fell again – to 4.19%.
Professor Karl E. Case, the founder of the Case Shiller Pricing Index in an article in the New York Times last month actually did the math for us:
Four years ago, the monthly payment on a $300,000 house with 20 percent down and a mortgage rate of about 6.6 percent was $1,533. Today that $300,000 house would sell for $213,000 and a 30-year fixed-rate mortgage with 20 percent down would carry a rate of about 4.2 percent and a monthly payment of $833 … housing has perhaps never been a better bargain.
4. You beat the rush of inventory that is coming next year.
Every year there is an increase of inventory which comes to market from January through April as homeowners put their houses up for sale in preparation for the spring market. As an example, here is the number of listings available for sale in each of those months in 2010.
January – 3,277,000
February – 3,531,000
March – 3,626,000
April – 4,029,000
You won’t have to worry about this increasing competition if you sell now.
5. You have less ‘discounted’ inventory with which to compete.
This year, sellers of non-distressed properties have been given an early holiday present. With banks declaring a suspension on the sale of many distressed properties (foreclosures), there has been a large supply of discounted properties removed from competition. No one knows how long this self imposed moratorium will last. However, while it does, every homeowner has a better chance of selling their property.
Bottom Line
If you are looking to sell in the near future, there may not be a more opportune time than this fall. Serious buyers, great move-up deals and less competition from foreclosures creates the perfect selling situation. Don’t miss it!
Reposted from Real Estate Matters Blogsite
Friday, October 15, 2010
The Foreclosure Mess- A Silver Lining?
There is no doubt that the current foreclosure mess is creating havoc in the housing industry. Listings are being removed from the market and many closings are being delayed and, in some cases, even canceled. No one is sure what the full impact of the situation will be or when it will be rectified. However, there could be a silver lining to this gigantic cloud of doubt.
First, let’s try to define the challenge. The Wall Street Journal quoted Adam Levitin, associate professor of law at Georgetown University, as saying there are three scenarios that could take place:
1.) In the best case scenario, the issues are simply technical, the situation is resolved and the foreclosure process continues. Many believe housing won’t recover until the glut of foreclosed homes clears the market.
2.) In the medium-case scenario, litigation ensues and the matter takes years to sort out. That will inflict more pain onto the already troubled housing market.
3.) In the worst case, the issues become a “systemic problem” that grinds the mortgage market to a halt and title insurers refuse to insure mortgages involving existing homes.
How long might it take to rectify the situation?
The deeper the problem gets the longer the solution will take. At first, the banks were talking in terms of weeks. Now people are guessing it could take months.
Calculated Risk reported excerpts from the JP Morgan conference call yesterday:
Analyst: The foreclosure suspension, it’s a matter of weeks instead of months, did I hear you say that?
JPM: No. I didn’t say weeks to clean up the files. We actually have to have little in depth conversations with regulators and AGs and stuff like that. So I don’t know exactly when. I’m hopeful that it all starts to move at one point. I don’t know if it’s going to be three weeks or five. But I think it will be a real shame if we don’t get this resolved and moving again.
Analyst: In all likelihood you should be allowed to foreclose as we go into next year.
JPM: I hope so. It’s not up to me.
Fox News reported yesterday:
Foreclosed homes that would have been sold by lenders now will be sold seven or eight months from now … said Andres Carbacho-Burgos, an economist at Moody’s Economy.com.
Diana Olick of CNBC probably said it best:
Anyone who says that the banks will fix all this in a few months is seriously delusional.
Where is the silver lining?
We often talk in this blog of the concept of ‘supply and demand’ and how it applies to future home prices. We have warned that prices will face downward pressure as the banks release their foreclosure inventory to the market. It appears that the release of much of that inventory will now be delayed for months. That creates an opportunity for any seller to sell their house now without facing that discounted competition.
The Wharton School of Business at the University of Pennsylvania addressed this issue. In the article, they said:
Wharton real estate professor Susan Wachter says the foreclosure freeze might temporarily buoy prices by keeping foreclosed properties off the market.
In the Fox News reported mentioned above, Carbacho-Burgos said:
That’s good news if you’re a homeowner looking to sell in the near term, because there won’t be as much competition from deeply discounted foreclosed properties.
Bottom Line
We are not suggesting that prices will begin to increase, just that they won’t fall as rapidly as originally predicted. It will be better to sell now rather than wait and compete against the flood of foreclosures that will be released once this challenge is corrected.
From the Real Estate Matters Website
First, let’s try to define the challenge. The Wall Street Journal quoted Adam Levitin, associate professor of law at Georgetown University, as saying there are three scenarios that could take place:
1.) In the best case scenario, the issues are simply technical, the situation is resolved and the foreclosure process continues. Many believe housing won’t recover until the glut of foreclosed homes clears the market.
2.) In the medium-case scenario, litigation ensues and the matter takes years to sort out. That will inflict more pain onto the already troubled housing market.
3.) In the worst case, the issues become a “systemic problem” that grinds the mortgage market to a halt and title insurers refuse to insure mortgages involving existing homes.
How long might it take to rectify the situation?
The deeper the problem gets the longer the solution will take. At first, the banks were talking in terms of weeks. Now people are guessing it could take months.
Calculated Risk reported excerpts from the JP Morgan conference call yesterday:
Analyst: The foreclosure suspension, it’s a matter of weeks instead of months, did I hear you say that?
JPM: No. I didn’t say weeks to clean up the files. We actually have to have little in depth conversations with regulators and AGs and stuff like that. So I don’t know exactly when. I’m hopeful that it all starts to move at one point. I don’t know if it’s going to be three weeks or five. But I think it will be a real shame if we don’t get this resolved and moving again.
Analyst: In all likelihood you should be allowed to foreclose as we go into next year.
JPM: I hope so. It’s not up to me.
Fox News reported yesterday:
Foreclosed homes that would have been sold by lenders now will be sold seven or eight months from now … said Andres Carbacho-Burgos, an economist at Moody’s Economy.com.
Diana Olick of CNBC probably said it best:
Anyone who says that the banks will fix all this in a few months is seriously delusional.
Where is the silver lining?
We often talk in this blog of the concept of ‘supply and demand’ and how it applies to future home prices. We have warned that prices will face downward pressure as the banks release their foreclosure inventory to the market. It appears that the release of much of that inventory will now be delayed for months. That creates an opportunity for any seller to sell their house now without facing that discounted competition.
The Wharton School of Business at the University of Pennsylvania addressed this issue. In the article, they said:
Wharton real estate professor Susan Wachter says the foreclosure freeze might temporarily buoy prices by keeping foreclosed properties off the market.
In the Fox News reported mentioned above, Carbacho-Burgos said:
That’s good news if you’re a homeowner looking to sell in the near term, because there won’t be as much competition from deeply discounted foreclosed properties.
Bottom Line
We are not suggesting that prices will begin to increase, just that they won’t fall as rapidly as originally predicted. It will be better to sell now rather than wait and compete against the flood of foreclosures that will be released once this challenge is corrected.
From the Real Estate Matters Website
Tuesday, October 12, 2010
The Foreclosure Mess
Last week, we reported on the beginnings of the mess the banks created by using ‘robo-signers’ to fast track foreclosure filings. We detailed the challenge and said that “the process of foreclosing may grind to a screeching halt”. And, it has. Bank of America has announced that it has halted foreclosures in all fifty states. Other major lenders have ceased foreclosures in 23 states and some politicians are calling for a total industry-wide moratorium.
Today, we want to explain what is actually taking place and what impact the situation may have on you and your family over the next several months.
Currently, many banks have ceased foreclosure procedures in all states which require a judicial process. You can find out whether your state requires such a process by visiting All Foreclosure.com which lists foreclosure procedures by state. It is our belief that all fifty states will eventually be impacted by the controversy.
How will it impact you?
That depends on where you are in the real estate process. We will look at three situations: your home is in foreclosure, you are selling or you’re buying a foreclosure.
You are a homeowner in the foreclosure process
It appears that some banks will be backing away from following through with normal foreclosure processes until they can be assured that their paperwork is in order. Early estimates are calling for a potential 30-90 delay to many foreclosure procedures (notices, repossessions, sales, etc.) However, there is absolutely no way for anyone to be sure whether your particular situation will be delayed.
You are currently selling a house
We have reported often on the affect foreclosures have on home prices in a community. The actual impact is measurable.
According to RealtyTrac, bank-owned properties went for an average of 35% less than non-foreclosure sales. Foreclosures not only absorb buyers but also impact the appraisals of the homes that surround them.
Obviously, if there are less distressed properties coming to the market, there will be less downward pressure on pricing in the short term. The Washington Post, in an article last week, reported:
Stretching out the foreclosure process would reduce the number of houses dumped on the market over the next six months, which could help firm up housing prices in the short term and put some extra support under a sagging economy.
There may be a window of opportunity for a seller to maximize the price they receive for their home if they sell in the next 90 days.
You are currently buying a foreclosure
A portion of the inventory of foreclosed homes on the market has been frozen. Banks and title companies (who insure good title to the property a buyer purchases) want to make sure the bank actually owns the property legally before they sell it.
The Washington Post in an article last week reported:
Nick Chaconas, a Maryland real estate agent, said he was one week from completing a foreclosure deal for one client, who was buying a $470,000 fixer-upper in Potomac, when an e-mail arrived putting the deal on the skids.
The e-mail, from the title insurance company involved in the deal, said the mortgage lender PNC was suspending foreclosure sales for at least 30 days “due to a review being undertaken on all foreclosure files.”
If you are buying a foreclosure, anticipate potential delays. We do not believe there will be large numbers of cancellations. Be patient and realize that you are getting a substantial savings on the purchase.
How long will the challenge persist?
The impact this will have on the housing recovery will be determined by both the depth and width of the challenge. Are there large numbers of homes that were mistakenly foreclosed on? We doubt it. Will the instances where errors (or even fraud) did exist cause mass delays? Maybe.
Peter J. Henning who follows issues involving securities law and white-collar crime for DealBook’s White Collar Watch explained:
The revelation of potential problems stretching across the foreclosure landscape means that civil suits against the parties to the process are inevitable. In individual foreclosure proceedings, homeowners would probably challenge any attempt to take title to the property, which may allow them to remain in their houses a while longer, or even stop the proceeding altogether.
On a larger scale, there are likely to be two potential classes of plaintiffs pursuing civil suits against the banks and others for their roles: first, homeowners who earlier lost their properties to foreclosure in which questionable documents were filed, and second, title insurance companies that may be on the hook for claims by purchasers of foreclosed properties who now have a cloud on the title to their house. Each may claim that the faulty documentation in the foreclosure cases caused them harm.
If class actions suits start to dominate this story, it could be a long time before we normalize the situation.
How will it impact the market overall?
There could be widespread ramifications. The Washington Post in an article last week:
It would not help the recovery of the economy, or the real estate market, if the foreclosure process became so hopelessly tangled that banks and investors effectively lose the ability to recoup the remaining value of their collateral. That would provide some immediate financial relief to households facing foreclosure, but it would encourage many more homeowners to begin shirking their mortgage payments in the belief that they would also be able to avoid the consequences. The long term consequences of that would be that mortgage rates would be higher and mortgage loans would be smaller and harder to get.
Bottom Line
As we said last week, fewer foreclosures coming to the market right now will mean prices will be less impacted. However, these properties will eventually come to market; if not now, than later. That will delay the housing recovery – perhaps for years.
Today, we want to explain what is actually taking place and what impact the situation may have on you and your family over the next several months.
Currently, many banks have ceased foreclosure procedures in all states which require a judicial process. You can find out whether your state requires such a process by visiting All Foreclosure.com which lists foreclosure procedures by state. It is our belief that all fifty states will eventually be impacted by the controversy.
How will it impact you?
That depends on where you are in the real estate process. We will look at three situations: your home is in foreclosure, you are selling or you’re buying a foreclosure.
You are a homeowner in the foreclosure process
It appears that some banks will be backing away from following through with normal foreclosure processes until they can be assured that their paperwork is in order. Early estimates are calling for a potential 30-90 delay to many foreclosure procedures (notices, repossessions, sales, etc.) However, there is absolutely no way for anyone to be sure whether your particular situation will be delayed.
You are currently selling a house
We have reported often on the affect foreclosures have on home prices in a community. The actual impact is measurable.
According to RealtyTrac, bank-owned properties went for an average of 35% less than non-foreclosure sales. Foreclosures not only absorb buyers but also impact the appraisals of the homes that surround them.
Obviously, if there are less distressed properties coming to the market, there will be less downward pressure on pricing in the short term. The Washington Post, in an article last week, reported:
Stretching out the foreclosure process would reduce the number of houses dumped on the market over the next six months, which could help firm up housing prices in the short term and put some extra support under a sagging economy.
There may be a window of opportunity for a seller to maximize the price they receive for their home if they sell in the next 90 days.
You are currently buying a foreclosure
A portion of the inventory of foreclosed homes on the market has been frozen. Banks and title companies (who insure good title to the property a buyer purchases) want to make sure the bank actually owns the property legally before they sell it.
The Washington Post in an article last week reported:
Nick Chaconas, a Maryland real estate agent, said he was one week from completing a foreclosure deal for one client, who was buying a $470,000 fixer-upper in Potomac, when an e-mail arrived putting the deal on the skids.
The e-mail, from the title insurance company involved in the deal, said the mortgage lender PNC was suspending foreclosure sales for at least 30 days “due to a review being undertaken on all foreclosure files.”
If you are buying a foreclosure, anticipate potential delays. We do not believe there will be large numbers of cancellations. Be patient and realize that you are getting a substantial savings on the purchase.
How long will the challenge persist?
The impact this will have on the housing recovery will be determined by both the depth and width of the challenge. Are there large numbers of homes that were mistakenly foreclosed on? We doubt it. Will the instances where errors (or even fraud) did exist cause mass delays? Maybe.
Peter J. Henning who follows issues involving securities law and white-collar crime for DealBook’s White Collar Watch explained:
The revelation of potential problems stretching across the foreclosure landscape means that civil suits against the parties to the process are inevitable. In individual foreclosure proceedings, homeowners would probably challenge any attempt to take title to the property, which may allow them to remain in their houses a while longer, or even stop the proceeding altogether.
On a larger scale, there are likely to be two potential classes of plaintiffs pursuing civil suits against the banks and others for their roles: first, homeowners who earlier lost their properties to foreclosure in which questionable documents were filed, and second, title insurance companies that may be on the hook for claims by purchasers of foreclosed properties who now have a cloud on the title to their house. Each may claim that the faulty documentation in the foreclosure cases caused them harm.
If class actions suits start to dominate this story, it could be a long time before we normalize the situation.
How will it impact the market overall?
There could be widespread ramifications. The Washington Post in an article last week:
It would not help the recovery of the economy, or the real estate market, if the foreclosure process became so hopelessly tangled that banks and investors effectively lose the ability to recoup the remaining value of their collateral. That would provide some immediate financial relief to households facing foreclosure, but it would encourage many more homeowners to begin shirking their mortgage payments in the belief that they would also be able to avoid the consequences. The long term consequences of that would be that mortgage rates would be higher and mortgage loans would be smaller and harder to get.
Bottom Line
As we said last week, fewer foreclosures coming to the market right now will mean prices will be less impacted. However, these properties will eventually come to market; if not now, than later. That will delay the housing recovery – perhaps for years.
Friday, October 8, 2010
Luxury Market Moving
The news about the housing market still seems to be dominated by stories of pending disaster. Headlines report that some believe that there is a 25% chance of a ‘double-dip’ in home prices. We can understand the concern. The last Existing Home Sales Report by the National Association of Realtors (NAR) showed that sales were down 19% from the same time last year. Obviously, the real estate market is still struggling
However, there is a segment of the housing market that is rapidly gaining momentum –LUXURY REAL ESTATE! Just last week we reported that NAR’s 2nd Quarter Report on Home Sales Statistics showed a 6.1% increase in sales of homes over a million dollars.
The latest home sales report mentioned above (covering August closings) shows an 11.5% increase in sales over that million dollar mark! (It also showed a 4.6% increase in sales of homes between $750,000 and $1 million). Though overall sales fell almost 20%, sales of upper end properties are escalating.
That Also Includes the ‘Super Luxury’ Market
The ‘super luxury’ market is defined by different prices in different markets. Any market however would consider homes over $4 million in this category. The Wall Street Journal last week reported on the Manhattan real estate market:
A report by Brown Harris Stevens and Halstead found that the number of co-op sales selling for more than $7 million in Manhattan doubled in the third quarter over a year earlier.
The Luxury Portfolio Fine Property Collection is the luxury face of Leading Real Estate Companies of the World the largest global network of premier locally branded companies dominated by many of the world’s most powerful independent luxury brokerages. On their website, they reported 20 sales of homes with a final listing price of over $ 4 million dollars in the last two months, covering eight different states!
Proper pricing is essential
The more affluent buyer is beginning to see opportunity in this real estate market. Make no mistake however. Whatever the price point, the luxury buyer must see value.
Hall F. Willkie, president of Brown Harris Steven, says that more affluent buyers “in the higher price point” were driving up the average price. “You are definitely seeing people feeling confident as long as they were getting good values,” he said…Pamela Liebman, president of Corcoran Group, said that there was a lot of strength in the market…”People are willing to spend large amounts of money for real estate because they feel they are getting more for their money,” she said.
Bottom Line
The wealthiest families in the country are re-entering the real estate market. That should tell everyone that the market is beginning its turn for the better.
Copied from Keeping Current Matters Blog
However, there is a segment of the housing market that is rapidly gaining momentum –LUXURY REAL ESTATE! Just last week we reported that NAR’s 2nd Quarter Report on Home Sales Statistics showed a 6.1% increase in sales of homes over a million dollars.
The latest home sales report mentioned above (covering August closings) shows an 11.5% increase in sales over that million dollar mark! (It also showed a 4.6% increase in sales of homes between $750,000 and $1 million). Though overall sales fell almost 20%, sales of upper end properties are escalating.
That Also Includes the ‘Super Luxury’ Market
The ‘super luxury’ market is defined by different prices in different markets. Any market however would consider homes over $4 million in this category. The Wall Street Journal last week reported on the Manhattan real estate market:
A report by Brown Harris Stevens and Halstead found that the number of co-op sales selling for more than $7 million in Manhattan doubled in the third quarter over a year earlier.
The Luxury Portfolio Fine Property Collection is the luxury face of Leading Real Estate Companies of the World the largest global network of premier locally branded companies dominated by many of the world’s most powerful independent luxury brokerages. On their website, they reported 20 sales of homes with a final listing price of over $ 4 million dollars in the last two months, covering eight different states!
Proper pricing is essential
The more affluent buyer is beginning to see opportunity in this real estate market. Make no mistake however. Whatever the price point, the luxury buyer must see value.
Hall F. Willkie, president of Brown Harris Steven, says that more affluent buyers “in the higher price point” were driving up the average price. “You are definitely seeing people feeling confident as long as they were getting good values,” he said…Pamela Liebman, president of Corcoran Group, said that there was a lot of strength in the market…”People are willing to spend large amounts of money for real estate because they feel they are getting more for their money,” she said.
Bottom Line
The wealthiest families in the country are re-entering the real estate market. That should tell everyone that the market is beginning its turn for the better.
Copied from Keeping Current Matters Blog
Luxury Market Moving
The news about the housing market still seems to be dominated by stories of pending disaster. Headlines report that some believe that there is a 25% chance of a ‘double-dip’ in home prices. We can understand the concern. The last Existing Home Sales Report by the National Association of Realtors (NAR) showed that sales were down 19% from the same time last year. Obviously, the real estate market is still struggling
However, there is a segment of the housing market that is rapidly gaining momentum –LUXURY REAL ESTATE! Just last week we reported that NAR’s 2nd Quarter Report on Home Sales Statistics showed a 6.1% increase in sales of homes over a million dollars.
The latest home sales report mentioned above (covering August closings) shows an 11.5% increase in sales over that million dollar mark! (It also showed a 4.6% increase in sales of homes between $750,000 and $1 million). Though overall sales fell almost 20%, sales of upper end properties are escalating.
That Also Includes the ‘Super Luxury’ Market
The ‘super luxury’ market is defined by different prices in different markets. Any market however would consider homes over $4 million in this category. The Wall Street Journal last week reported on the Manhattan real estate market:
A report by Brown Harris Stevens and Halstead found that the number of co-op sales selling for more than $7 million in Manhattan doubled in the third quarter over a year earlier.
The Luxury Portfolio Fine Property Collection is the luxury face of Leading Real Estate Companies of the World the largest global network of premier locally branded companies dominated by many of the world’s most powerful independent luxury brokerages. On their website, they reported 20 sales of homes with a final listing price of over $ 4 million dollars in the last two months, covering eight different states!
Proper pricing is essential
The more affluent buyer is beginning to see opportunity in this real estate market. Make no mistake however. Whatever the price point, the luxury buyer must see value.
Hall F. Willkie, president of Brown Harris Steven, says that more affluent buyers “in the higher price point” were driving up the average price. “You are definitely seeing people feeling confident as long as they were getting good values,” he said…Pamela Liebman, president of Corcoran Group, said that there was a lot of strength in the market…”People are willing to spend large amounts of money for real estate because they feel they are getting more for their money,” she said.
Bottom Line
The wealthiest families in the country are re-entering the real estate market. That should tell everyone that the market is beginning its turn for the better.
Copied From Steve Harney's Blog
However, there is a segment of the housing market that is rapidly gaining momentum –LUXURY REAL ESTATE! Just last week we reported that NAR’s 2nd Quarter Report on Home Sales Statistics showed a 6.1% increase in sales of homes over a million dollars.
The latest home sales report mentioned above (covering August closings) shows an 11.5% increase in sales over that million dollar mark! (It also showed a 4.6% increase in sales of homes between $750,000 and $1 million). Though overall sales fell almost 20%, sales of upper end properties are escalating.
That Also Includes the ‘Super Luxury’ Market
The ‘super luxury’ market is defined by different prices in different markets. Any market however would consider homes over $4 million in this category. The Wall Street Journal last week reported on the Manhattan real estate market:
A report by Brown Harris Stevens and Halstead found that the number of co-op sales selling for more than $7 million in Manhattan doubled in the third quarter over a year earlier.
The Luxury Portfolio Fine Property Collection is the luxury face of Leading Real Estate Companies of the World the largest global network of premier locally branded companies dominated by many of the world’s most powerful independent luxury brokerages. On their website, they reported 20 sales of homes with a final listing price of over $ 4 million dollars in the last two months, covering eight different states!
Proper pricing is essential
The more affluent buyer is beginning to see opportunity in this real estate market. Make no mistake however. Whatever the price point, the luxury buyer must see value.
Hall F. Willkie, president of Brown Harris Steven, says that more affluent buyers “in the higher price point” were driving up the average price. “You are definitely seeing people feeling confident as long as they were getting good values,” he said…Pamela Liebman, president of Corcoran Group, said that there was a lot of strength in the market…”People are willing to spend large amounts of money for real estate because they feel they are getting more for their money,” she said.
Bottom Line
The wealthiest families in the country are re-entering the real estate market. That should tell everyone that the market is beginning its turn for the better.
Copied From Steve Harney's Blog
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