Archive for the 'Real Estate News' Category
The Mortgage Crisis - A Boon For Homebuyers?
August 5th, 2008 categories: Market Trends, Real Estate News
Home buyers must feel a bit dizzy these days. As they say, “so many homes, and so little time!” Well, maybe that’s not exactly what they say, but you know what I mean. As the market’s downturn has continued, the proverbial “seller’s pain”, is definitely the buyer’s gain.
CNNMoney’s news last week of the most recent S&P/Case-Shiller Home Price Index told us something most of us already knew; home prices are continuing their decent. As the article reports, the good news is, according to Mike Moran, chief economist for Daiwa Securities America, the new sales numbers may mean that the market is starting to stabilize.
But, while there may be hints of market stabilization, many believe the mortgage/housing crisis is far from over. With foreclosure numbers increasing weekly, home prices won’t be on the mend anytime soon.
Simply put, home prices are subject to market forces. Home foreclosures drive down home prices. So, until we hit the foreclosure critical mass, recovery can’t begin. And, since as we aren’t there yet, don’t put you’re worry beads away yet! But, hopefully, as the Home Index Report suggests, we’ve begun to see positive signs.
One of those signs for buyers is the increased number of former short sale properties that are now foreclosures. Properties that formerly seemed impossible to purchase, even with the best of terms (the lender seemed ignore), now can be had, oftentimes, very rapidly, at bargain prices!
Stafford & Spotsylvania County’s most recent sales figures through June are indicative of this:
|
STAFFORD 2008 |
2007 | % Change | |
|---|---|---|---|
| Total Sold Dollar Volume: | $ 46,221,188 | $ 61,893,991 | - 25.32 % |
| Average Sold Price: | $ 302,099 | $ 375,115 | - 19.46 % |
| Median Sold Price: | $ 278,900 | $ 363,000 | - 23.17 % |
| Total Units Sold: | 153 | 165 | - 7.27 % |
| Average Days on Market: | 110 | 114 | - 3.51 % |
| Average List Price for Solds: | $ 336,553 | $ 399,342 | - 15.72 % |
| Avg Sale Price as a percentage of Avg List Price: |
89.76 % | 93.93 % |
SPOTSYLVANIA
| 2008 | 2007 | % Change | |
|---|---|---|---|
| Total Sold Dollar Volume: | $ 42,932,318 | $ 59,331,500 | - 27.64 % |
| Average Sold Price: | $ 286,215 | $ 339,037 | - 15.58 % |
| Median Sold Price: | $ 262,450 | $ 310,000 | - 15.34 % |
| Total Units Sold: | 150 | 175 | - 14.29 % |
| Average Days on Market: | 138 | 98 | 40.82 % |
| Average List Price for Solds: | $ 318,932 | $ 356,727 | - 10.59 % |
| Avg Sale Price as a percentage of Avg List Price: |
89.74 % | 95.04 % |
For those looking moving to the Stafford and Fredericksburg area, the market continues to make buying a home an inviting choice. While more than a few may opt to rent instead, you may be passing up a golden opportunity that you won’t see again for many years to come.
With low prices, as well as mortgage rates still around 6 percent, how can you pass up the chance market professionals long for; buying low, to later sell high. It almost sounds too good to be true. But in this case, it’s nothing more than smart buying!
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What’s “short” About A Short Sale - Part II?
June 29th, 2008 categories: Finance, Market Trends, Real Estate News, Repairs
So, despite the promise and benefits of a “short sale“, why do they seldom work? Why does there seem to be such a huge disconnect between the seller and their real estate agent, and the lender?
Unfortunately, there are a number of reasons for the general failure of the short sale process.
1) One of the biggest obstacles to a successful short sale is the lack of communication between the listing agent and the lender. Coordination between the real estate agent, who has listed the property, and the lender, or the asset manager handling the property is crucial for a successful transaction. Communication between the asset manager and real estate agent is problematic at best. In almost all short sale cases, attempts to contact the lender’s loss mitigation department or asset manager are rarely successful.
As any agent whose handled a short sale transaction will tell you, in a transaction whose success depends on coordination, frequent and easy communication with the asset manager handling the transaction is rarer than rare. Despite agent’s best efforts, it’s normally a struggle (and that’s putting it midly!) to contact the lender’s point of contact. Building this bridge between the listing agent and the lender is crucial to the success of any short sale. Without this relationship, the short sale is destined to be Dead on Arrival (DOA).
2) The asset managers are overwhelmed by their case loads. Like most of America, lenders were blind sided by the subprime mortgage mess, and are in the crisis management mode attempting to stop the financial bleeding. In other words, the lender’s employees, especially those in loss mitigation, are peddling as fast as they can.
3) The real estate community, much like the lenders on the other side of this short sale joy ride, are, in most cases, lacking the preparation needed to properly market the property in coordination with the lender. To begin the process of coordiation with the lender, the listing agent must compile a full package with supporting documentation from the seller. Rarely, if ever, will the lender even begin to listen to an agent without a complete short sale package in front of them. This short sale submission package should include, among other things:
1. A synopsis of items enclosed.
2. Completed financial disclosure.
3. A hardship letter, preferrably hand written. Remember, this the opportunity to relay the seller’s “story” to let the lender know why they’ve missed payments and won’t be able to make them in the future.
4. Purchase contract.
5. Net sheet or HUD1.
6. Proof of income for the last two pay periods.
7. Copies of last two bank statements.
8. Copies of last two years tax returns with W-2s and 1099s.
9. Third party authorization form.
Some additional items that may be helpful include, a Broker Price Opinion (BPO) or Comparative Market Analysis (CMA), neighborhood foreclosure stats & proof of active listings in the area that are priced low but aren’t selling. All of these will assist you in presenting the seller’s case to the lender.
Pricing the property correctly is another must. A simple method is to take the low end of the comparables, and price the property $10,000-$20,000 lower. It’s important to price the property to peek interest, but the pricing needs to be realistic as well.
An opportunity for a short sale is beneficial to both the seller and lender. For both parties, it’s an escape from a difficult financial predicament. The seller unloads a property they can no longer afford, as does the bank, with minimal damage to the credit rating they need for future investments. The bank, unlike a foreclosure, can avoid managing a property, and unload one on much better terms than if foreclosed.
With the attractions of the short sale option, we can only hope the practice gets much better before the window of opportunity for this “bargain” creeps closed. There’s work to be done on both sides of the transaction. For lenders, establishing a routine and regular avenue of communication with the real estate agent listing the property is a necessary first step. For agents, taking the time to learn the steps necessary to comply with lender requirements might make the coordination process on the other end a bit easier to navigate. In either case, progress is measured in dollars, not finger pointing. So, what are we waiting for?
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What’s “short” About A Short Sale?
June 24th, 2008 categories: Market Trends, Real Estate News, Repairs
During the past couple of years the real estate community has been up to its proverbial eyeballs with short sale properties. But, for many, at first “blush”, the term short sale didn’t mean much other than another transaction opportunity with real estate. However, as many Realtors & their clients alike have learned, dealing with a “short sale” can be anything but short.
According to REALTOR.ORG, a short sale is, ”when the net proceeds from the sale of a home are not enough to cover the seller’s mortgage obligations and closing costs, such as property taxes, transfer taxes, and the real estate practitioner’s commission.” In other words, the proposed sales price is short of what is required to pay off the home loan or mortgage. You might ask, “why would the bank/lender allow a home to be sold for less than what is owed. To put it simply, short sales are normally done prior to a home going into foreclosure in order to save money. Yep, to save money. According to the Virginia Association of Realtor’s special counsel, Lem Marshall, outside of the loss incurred to pay off the mortgage, lenders spend approximately $65,000 dollars on foreclosed properties. So, as you can see, to begin with, it makes sense for the bank to consider a short sale in order to head off further expenses resulting from the expenses of a foreclosed property. But, the benefits of a short sale aren’t simply financial. There are other benefits as well.
In the communities plagued with foreclosed properties, neighborhoods often begin to go downhill in a hurry due to the lack of attention to the foreclosed properties. Since these properties are no longer occupied, they are often neglected and rarely properly maintained. Often, they are vandalized.
Remember, banks aren’t in the property management business, nor do they want to be. But, unlike foreclosures, in the case of a short sale property, the occupants inhabit the house, and are there to look after the property. While they may have ceased making their mortgage payments, in most cases, the owners or tenants remain in the house until it is sold, or when repossessed by the bank in the case of a foreclosure. A short sale is also in the best interest of the home owner.
Homeowners facing a possible foreclosure can avoid the stigma, embarassment and credit problems a foreclosure entails. By opting for a short sale, homeowners not only can remain in their home, but the damage to their credit score is small compared to the penalty they face if their home is foreclosed on. Most lenders report “settled” upon successful closing of a short sale instead of the term “foreclosed.” Recent reports indicate the owners who complete short sale proceedings (who have missed 2-5 mortgage payments) have their credit score affected by only 30 to 60 points. Conversely, for those suffering through a foreclosure, their credit score will be penalized 140 to 200 points, or more. That’s a huge difference. So, as you can see, a short sale in lieu of a foreclosure makes sense for all parties involved. But, if that’s the case, why are so few short sales successful? Why is it so difficult to get to a Win-Win scenario? Who is to blame? More importantly, what remedy is their for a process designed to prevent property foreclosure, yet rarely does? We’ll leave those questions for Part II of our short sale discussion.
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Buying Your Next Home With the End Game In Mind
May 28th, 2008 categories: Market Trends, Real Estate News, Relocating, Spouse Stuff
Purchasers, any purchases for that matter, are often done with one thing in mind. Specifically, possession of the object being bought. In simple terms, we found something we like, something we want to possess, and “having it” is a MUST. But, what about the cost, or the long term value of what is probably our most expensive asset, our home? Is it important to consider what its value might be, three, five, or ten years down the road? Similar to Wall Street’s most successful investors, is buying for the long term, or at least taking a value based approach, a recipe for success when it comes time to sell?
In one of the 1990’s best selling books on leadership, The Seven Habits of Highly Effective People, Steven Covey outlines key principals of personal development that lead to success in our personal and professional lives. One of his Seven Habits, the second, emphasizes the importance of “beginning with the end in mind” when making choices in life. Simply put, this means working backward from where you want to end up and making choices that will get you there. So, as a home buyer, what does that mean? How can you benefit from Covey’s advice?
For many home buyers, especially those in Northern Virginia, relocation is a way of life. Many are Department of Defense (DoD) employees, or employed with contractors doing work with the federal government. Moving and selling homes are something that oftentimes comes much too soon. But, even in a buyer’s market, forethought and considering an exit strategy or end game when making the purchase, can make the goodbye a few years later much easier to handle financially, and more importantly, emotionally.
One of the most important questions to consider when purchasing a home is, “What would prevent buyers from wanting to live in this home?” While that consideration may seem to be apparent, believe it or not, it is often more of afterthought. Instead, we concentrate on the positives, and minimize the drawbacks of the property. But that’s purely part of human nature, don’t you think? Clearly, the attractive features are important and shouldn’t be minimized. But, it’s wise to consider the drawbacks, especially those that might be deal breakers.
What sort of drawbacks are we talking about? What might prevent prospective buyers from choosing other homes instead of yours?
- Location - there’s lots to consider here. The obvious is proximity from schools, shopping, and other area attractions. Is the property hard to get to? How about traffic patterns? Is it located on a street where there’s a high traffic volume? Does the traffic make it difficult to get in and out of the driveway?
- What about the particular lot. Is it level? And, if not, does it matter. How steep is the driveway? As one blogger mentioned on their site about the a driveway concern, “Basically the only thing that is keeping us from signing the purchase and sale (which we have to do some time today) is our ambivalence about the driveway - the one thing we really can’t fix.” Where does the water concentrate or run off to when it rains? Does it drain away from the house or towards the house causing excessive wetness next to the house? These are questions that need to be considered before purchasing any property.
- What about the basement. Is it a walk-up, or preferably, a walk-out? You can bet that most buyers prefer an outside entrance/exit to the basement. With walk-outs, the additional outside light these provide are another attraction.
- Room sizes. While we don’t expect the normal home to provide us the extravagance of a luxury home, the homebuilding trend has been one of a bit more room in both the kitchen and the bathrooms, especially the Master bathroom . Remember, you can always upgrade what’s there, but it’s much more difficult to make rooms larger once the home is already built. That goes for the bedrooms as well.
- Subdivision amenities/fees. While all homes aren’t necessarily in a subdivision, or part of a Home Owners Association (HOA), when they are, they can be an important attraction, or, at times the reason for hesitation by the buyer. Some of the attractive features include swimming pool, bike/walking trails, sidewalks, and a community clubhouse, among others. For some, this package of community features is enough to tip the balance when two homes are competing for a buyer. On the other hand, HOA fees and restrictions can be the deciding factor between two competing properties. If fees are too high, and restictions too onerous, buyers can turn to many other appealing choices. Most of us just don’t need the expense and headaches.
There are many important issues home buyers consider in their search for a place to call home. While each of us tends to focus on the attractive home features, we need to consider the flip side of the equation as well. What are the drawbacks? Home buyers, at some point, become home sellers. The last thing you want to thinking when it comes time to sell is, “shoulda, woulda, coulda.” As a buyer, use some forsight and ask the critical, discriminating questions before you buy. While a home’s ”bells and whistles” can be awfully attractive, make sure you notice the blemishes as well. It’ll sure help when it gets to the end game and its time to pack up for another assignment.
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Shrinking Revenue and Bigger Roads
May 22nd, 2008 categories: Real Estate News, Relocating
One of the many tasks our government (elected and otherwise) employees are responsible for is maintaining the roads. As I’ve routinely warned incoming clients, when it comes to day to day living in Northern Virginia, the “long pole in the tent” is transportation. With the area’s increasing population, and more and more cars on the road, traffic congestion seems to get worse every day. For commuters, getting to and from work can be a daily exercise in patience, patience, and more….yes, patience. In its attempt to bring in greater revenues to fund road expansion and improvement, agencies and politicians have had their sights set on increasing the homeowner’s grantor’s tax, which owners have to pay when selling their home in Virginia. 
In order to fund transporation improvements, not only are we going to see increases in our automobile related costs (motor vehicle rental tax, sales tax on auto repairs, vehicle safety inspections, etc.), but also place part of that revenue burden on the home seller. While we understand the need to improve/expand the roads (do we ever!), asking home owners to help foot that bill is questionable. But, as one of the Arlington County Board member said, “No one ever wants new taxes, but more people are recognizing that location is only valuable if you can get there.” The public has resisted efforts to increase the grantor’s tax. Voters rejected an increase in sales tax to pay for transportation in a 2002 referendum. Similary, following last year’s Northern Virginia Trasnportation Authority (NVTA) tax increase to pay for transportation improvements, the constitutionality of the measure was successfully challenged and overturned. Specifically, the Virginia Supreme Court ruled the General Assembly “did not have a constitutional basis to delegate taxation authority to NVTA.”
But, these efforts to squeeze the homeowner seems to know no end. In his call for a special June 23rd session of the Commonwealth’s General Assembly, to specifically address transportation challenges, one of the governor’s revenue proposals is an increase in the grantor’s tax by 25 cents. Opposed to this proposal is the Virginia Association of Realtors (VAR), specifically disagreeing with the statewide tax increase, which VAR fears unfairly taxes homeowners who won’t benefit from revenue generated. And, somehow, even if the increase in the grantor’s tax doesn’t survive this session, I’m sure we’ll be seeing it again real soon.
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What’s Does “MilitarybyOwner” Have To Do With Military Homes?
May 15th, 2008 categories: Military Installations, Real Estate News, Relocating
Earlier this year, the National Association of Realtors (NAR), adopted a new Standard Operating Procedure (SOP), 12-12. It stipulates that Realtors shall not:
Use URLs or domain names that present less than a true picture, or register URLs or domain names which, if used, would present less than a true picture.
In a recent case involving the use of a Realtor’s website name, or URL, NAR already exercised its enforcement of the new restrictions. In this partciular case, a Realtor was using the URL northwoodsandlakesmls.com for his website. While the website did contain information about the area, the use of “mls” in the URL was deemed to be in violation of the intent of the new SOP. Why? The letters “MLS”, in real estate jargon, are understood to stand for Multiple Listing Service. The Multiple Listing Service, or MLS, is the information sharing and cooperative marketing network or platform used by realtors for the buying and selling of homes. The northwoodsandlakesmls.com was a Realtor’s website that did feature homes for sale, but not those of the entire MLS. In other words, it was not in any way, operated by or with a Multiple Listing Service (MLS). Obviously, this Realtor was attempting to take advantage of the of the letters “MLS”. An acronym, or initials that the realtor world, and those familiar with its use, recognized as relating to home sales. In his defense, the Realtor explained, “If I used MLS in the name of my firm, I could see how that might be perceived as something less than a true picture,” he argued, “but by simply using MLS in my URL I am telling consumers that they can get MLS-provided information about properties in the north woods from me. What could be truer than that?” Unfortunately, the Board, and NAR didn’t see it that way. So, what is in a name, or URL, and what does “presenting less than a true picture mean”?
For may military personnel, one of the first places they go to on the web to look for homes is militarybyowner.com, or MBO.
According to the owner and author, its Mission is:
“MilitaryByOwner.com will provide a comprehensive low cost means for military members and their families to advertise on the world wide web. The service will be provided throughout the entire year and will encompass all locations where military members may be stationed to include overseas assignments. MilitaryByOwner.com will aggressively advertise in base newspapers and other military periodicals as well as leverage web based search engine postings in order to attract military personnel and the general public to this site to ensure success”.
True to their word, MilitaryByOwner has done a respectable job of advertising in publications targeting military families, and has taken advantage of similar advertising online. As a matter of fact, it is one of the first places military members turn when it is time to sell or buy a home. During its first few years of existence, MBO’s popularity mimicked its counterpart, “For Sale By Owner”, which, in a hot market was an easy way for home sellers or buyers, to go it on their own, and try to save a few dollars. Additionally, the military community is one built on trust, among other things, and that, too was an attraction of the site for military members, and an intent of the marketing effort. Seemingly, buyers and sellers were dealing with other military members. It was almost like family.
But, as far as their efforts to ”encompass all locations where military members may be stationed to include overseas assignments”. Is that really true? And what about that name “MilitaryByOwner”? As we look a little deeper into what MBO has to offer, we see that many of their listings aren’t military at all. After a careful examination, one finds many of the listings are Realtor listings, regardless of the client’s profession. As far as the listings ecompassing locations where military members may be stationed, we’ll, let’s just say that that depends on one’s perspective. Don’t all online Homes for Sale sites do the same? Simply put, with MBO, one listing criteria they include is the distance the property is from a military base/installation. For home listings, the proximity to military base choices are:
<10miles
<20 miles
<30 miles
<40 miles
<50 miles
>50 miles
As you can see, just about anywhere in the U.S is more than 50 miles from a selected military installation, or anywhere else for that matter. Unless, of course, it is less than 50 miles. In other words, are the homes advertised necessarily close to a military base? No. Some are, and some aren’t, just like other sites. Secondly, does MilitarybyOwner mean owned by military? Of course not. And, perhaps it was never meant to be.
It needs to be pointed out that MilitaryByOwner.com, unlike northwoodsandlakesmls.com, is not bound by the restrictions of the National Association of Realtors (NAR). The latter is owned by a Realtor, and in NAR’s estimation, his website was a bit misleading. MilitarybyOwner.com may not mean exactly what it says either, but its owner is not a Realtor. However, the owner’s spouse is. Does that count?
Don’t get me wrong, MilitarybyOwner is another resource for military home buyers and sellers. Does it provide something more than Zillow.com, Trulia.com, the local MLS, or similar sites? While each of these provide various helpful tools for those active in the housing market, a look at some of their additional features may provide military members with a more comprehensive marketing package for sellers, and much more capability for buyers. With state of the art mapping tools, finding available homes near military bases has become much easier for those being reassigned.
Buying and selling homes for Department of Defense (DoD) personnel, whether civilian or military, can be challenging. Due to the brief duty assignments, most sellers are simply happy to “break even” with the transaction. Buyers, on the other hand, are looking to get the most out of their transaction, realizing they’ll probably be turning around and selling two or three years down the road. In today’s tough home market, making the most of the tools the internet has to offer is vital in maximizing the value of your transaction. Especially for military members, take the time to ensure the platform or service you use is one you get the most out of. And, sometimes, believe it or not, less ISN’T more.
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