The problems with short sales...

This article rings especially true in today's market. I am seeing more and more delays in short sale transactions and then falling through. This frustrates not just first time homebuyers but anyone really looking to move.

As much as I can, I try to steer clear of these transactions to best assist my buyers. Short sales (ironic name) can be a very lengthy process. I've been under contract with 3 for over 3 months without a response from the bank. This can be frustrating to not just the buyers, but the agents and sellers as well.


Short sales lose appeal among first-time buyers

WASHINGTON – Sept. 29, 2011 – Short sale transactions are becoming less popular among first-time homebuyers. Buying a home in a short sale transaction may offer a huge bargain – sale prices average 27 percent lower than non-distressed properties – but more first-time home buyers say the processing delays aren’t worth the trouble.

First-time buyers’ share of all short sales dropped to 39.7 percent of transactions in August – a three-month drop and the lowest share ever recorded for first-time homebuyers, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. In November 2009, first-time homebuyers’ share of short sales reached a peak of 54.1 percent of all short sale transactions.

With bargain deals, why are short sales losing their appeal?

Buyers complain that short sale transactions take too long to close, with approval times often taking several months after a buyer submits an offer. Some buyers, frustrated at the delays, place offers on multiple properties with plans to close on whichever one is approved fastest.

The average time on market for short sales is 16.6 weeks, and the majority of that time is spent waiting for short sale approval, the HousingPulse Tracking Survey found.

Source: “First-Time Buyers Losing Interest in Short Sales,” RISMedia (Sept. 26, 2011)

© Copyright 2011 INFORMATION, INC. Bethesda, MD

Wondering why there's hardly homes for sale???

Shadow inventory continues to decline

SANTA ANA, Calif. – Sept. 28, 2011 – Current residential shadow inventory as of July 2011 declined slightly to 1.6 million units – representing a supply of 5 months – from a six-month supply of 1.9 million units one year earlier, according to CoreLogic. It’s also down from April 2011 when shadow inventory stood at 1.7 million units.

The reason is simple: Banks are disposing of distressed assets faster than they’re adding new ones into the system.

CoreLogic estimates the shadow inventory, also known as pending supply, based on the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more) – properties most likely to become bank-owned listings (REOs). Properties not yet delinquent aren’t included in the estimate of shadow inventory.

Data highlights:

• The shadow inventory of residential properties as of July 2011 fell to 1.6 million units, or a five-month supply, down from 1.9 million units, or a six-month supply, as compared to July 2010.

• Of the 1.6 million properties currently in the shadow inventory, 770,000 units are seriously delinquent (2.2-months’ supply), 430,000 are in some stage of foreclosure (1.2-months’ supply) and 390,000 are already in REO (1.1-months’ supply).

• As of July 2011, the shadow inventory is 22 percent lower than the peak in January 2010 at 2 million units, an 8.4-months’ supply.

• The total shadow and visible inventory was 5.4 million units in July 2011, down from 6.1 million units a year ago. The shadow inventory accounts for 29 percent of the combined shadow and visible inventories.

• The aggregate current mortgage debt outstanding of the shadow inventory was $336 billion in July 2011, down 18 percent from $411 billion a year ago.

“The steady improvement in the shadow inventory is a positive development for the housing market,” says Mark Fleming, chief economist for CoreLogic. “However, continued price declines, high levels of negative equity and a sluggish labor market will keep the shadow supply elevated for an extended period of time.”

© 2011 Florida Realtors®

Home listing prices rising in Florida



Go Florida!

ORLANDO, Fla. – Sept. 26, 2011 – Prices are rising in Florida.

Florida cities have had the largest year-over-year increases in average list prices, according to the latest real estate data from Realtor.com. Based on August data of 2.2 million listings in 146 markets, Florida cities make up nine of the top 10 places for highest year-over-year list price spikes.

Nationwide, the average list price is $320,325, up 2.36 percent year-over-year.

Here are the top 15 cities boasting the highest percentage of year-over-year increases in average list prices.

1. Miami
Average list price: $640,332
Year-over-year increase: 27.4%

2. Fort Myers-Cape Coral, Fla.
Average list price: $443,570
Year-over-year increase: 26.27%

3. Central-Fla. rural service area
Average list price: $405,809
Year-over-year increase: 19.41%

4. Punta Gorda, Fla.
Average list price: $267,066
Year-over-year increase: 16.37%

5. Macon, Ga.
Average list price: $193,520
Year-over-year increase: 15.98%

6. Sarasota-Bradenton, Fla.
Average list price: $466,785
Year-over-year increase: 15.86%

7. Naples, Fla.
Average list price: $713,087
Year-over-year increase: 15.13%

8. West Palm Beach-Boca Raton, Fla.
Average list price: $591,895
Year-over-year increase: 14.68%

9. Ocala, Fla.
Average list price: $193,360
Year-over-year increase: 12.07%

10. Lakeland-Winter Haven, Fla.
Average list price: $181,409
Year-over-year increase: 11.48%

11. Orlando, Fla.
Average list price: $319,419
Year-over-year increase: 10.56%

12. Portland-Vancouver, Ore.-Wash.
Average list price: $314,537
Year-over-year increase: 10.52%

13. Boise City, Idaho
Average list price: $212,588
Year-over-year increase: 10.43%

14. Springfield, Illinois
Average list price: $174,537
Year-over-year increase: 9.12%

15. Shreveport-Bossier City, La.
Average list price: $211,414
Year-over-year increase: 8.34%

Source: Melissa Dittmann Tracey, Realtor® Magazine Daily News

© 2011 Florida Realtors®

More home sellers paying full real estate commissions

FORT LAUDERDALE, Fla. – Sept. 22, 2011 – Someone selling a home is more likely to pay a full real estate commission today than during the housing boom, when discounts ruled and most properties sold quickly.

Commissions have steadily increased in recent years, despite a rash of foreclosures and falling home values that have left sellers with little spare cash to pay a broker.

The average commission nationally at year-end 2010 was (higher than) 2005, according to Real Trends, a publishing and consulting company based in Castle Rock, Colo.

In the housing frenzy of 2000 to 2005, sellers often questioned the value of agents. The number of brokers ballooned, and the competition for listings led some agents to cut commissions.

But when the housing market soured beginning in 2006, agents couldn’t leave the profession fast enough, and it became much harder to sell homes. Agents say sellers have since grown more appreciative of what they do.

“Sellers are very happy to pay the full commissions, even though they’re getting less money for their homes,” said Claire Sheres of Coldwell Banker in south Palm Beach County, Fla.

“They’re not quibbling …” added Scott Agran, head of Boca Raton, Fla.-based Lang Realty. “They’re saying, ‘What can you do to sell my house for the highest price and in the quickest amount of time?’ “

Agents now have to spend more time and money marketing the properties, and their jobs aren’t limited to finding buyers and securing contracts, said Beverly Rothstein of the Christopher White Group in northwest Broward County.

Agents also have to help arrange financing and title insurance to keep the sales moving toward the closing table.

“No one really has given me any grief about commissions,” Rothstein said. “In this market, your best friend is your real estate agent.”

Robin Craig didn’t think she’d need an agent to sell her two-bedroom cottage in Fort Lauderdale’s Victoria Park. So in May she created a website and flyer and stuck a sign in her front yard.

But for Craig, a 43-year-old accountant, negotiating with prospective buyers’ real estate agents was challenging, and so was coordinating the many showings. Three weeks later, with the house still unsold and a deadline looming for her to move to a new job in Atlanta, Craig hired Tim Singer of Coldwell Banker.

She said she’ll happily pay the … commission on the $529,000 listing.

“I underestimated the amount of time that was involved,” she said. “And he’s got market data and experience that I don’t have.”

Agents say they typically avoid showing homes that owners are selling themselves. Some of the sellers are hostile toward agents and have no intention of paying a commission to the buyer’s broker, Singer said.

Jon Holbrook, president of Delray Beach, Fla.-based BuyOwner.com, said he encourages his clients to work with buyers’ agents and come to terms on some sort of compensation, should a sale result.

Still, with dwindling home equity an issue in South Florida and across the country, sellers would be wise to try selling their homes on their own, Holbrook said. Those who don’t end up losing much of their profit to commissions. “It’s painful,” he said.

Many homeowners who bought during the housing boom are “underwater,” owing more than the properties are worth.

Nearly half the homes with mortgages in Broward County – more than 205,000 properties – are underwater, according to a second quarter report Tuesday from CoreLogic, a California research firm. In Palm Beach County, 42 percent of the homes with mortgages, or more than 137,000 properties, are worth less that what’s owed.

Some of these homeowners will pay the real estate commissions out of their own pockets. But many are falling into foreclosure or completing short sales, in which they unload the properties for less than they owe, with the bank’s blessing. In those transactions, the sellers don’t have to worry about the commissions, which are paid by the lenders.

Banks tend to hold down commissions on short sales and foreclosures to minimize their losses, but some agents say lenders are paying the full (amount) so that the agents will actively market the homes.

“These homes aren’t selling by themselves,” said Douglas Rill, a longtime broker at Century 21 America’s Choice in West Palm Beach.

Copyright © 2011 the Sun Sentinel, Fort Lauderdale, Fla., Paul Owers. Distributed by McClatchy-Tribune News Service.

Scary news for 30,000 Bank of America Employees!

Bank of America will eliminate 30,000 jobs

NEW YORK – Sept. 13, 2011 – Bank of America is slashing 30,000 jobs as part of an effort to reverse a crisis of confidence among investors. It’s the largest single job reduction by a U.S. company this year.

What CEO Brian Moynihan is trying to do is nothing less than save the nation’s largest bank. Investors have cut the bank’s market value by half this year. The bank is facing huge liabilities over soured mortgage investments and concerns over whether it has enough capital to withstand more financial shocks.

The cuts, which affect Bank of America’s consumer businesses, represent 10 percent of the Charlotte, N.C. bank’s workforce. The bank said it hopes the cuts and other measures will result in $5 billion in annual savings by 2014. The bank has already cut 6,000 jobs this year. The bank also said it would look for cost savings at its other businesses in a six-month review that will begin next month.

“It’s as if someone has hit the panic button,” said Bert Ely, president of banking consultant Ely & Co.

Moynihan has been taking other steps to shore up the bank’s standing. Last week he shook up the bank’s top management ranks and has been selling parts of the company to raise cash. Last month Warren Buffett’s Berkshire Hathaway Inc. invested $5 billion in the company.

Moynihan has struggled to calm investors ever since he took the top job in January 2010. He is reversing the empire-building strategy of his predecessor, Ken Lewis, who stepped down amid controversy over the purchase of Merrill Lynch during the financial crisis. Lewis also engineered the ill-fated acquisition of Countrywide Financial Corp., then the country’s largest mortgage lender, which has led to heavy financial losses, lawsuits and regulatory probes.

Moynihan is now taking a knife to the company, hoping to shrink it down to a more manageable size even if it means losing the bragging rights of being the nation’s largest bank. “We don’t have to be the biggest company out there,” said Moynihan.

Bank of America’s stock has lost 48 percent this year, largely because of problems related to poorly written mortgages at Countrywide. Just in the first half of the year the bank paid out $12.7 billion to settle claims from investors that it sold them securities backed by faulty mortgages.

Some investors and analysts worry that the job cuts will lead to poor customer service and the bank will lose market share to rivals at a time when there are signs that the economy is slowing down. They also wonder if the job cuts are enough to produce the profits the bank needs to overcome the spiraling costs from its mortgage business.

“There is a fair amount of skepticism on Wall Street, and Brian is doing as much as he can do in the face of a worsening economy,” said Nancy Bush, an analyst and contributing editor at SNL Financial, a research firm.

The bank’s stock was down for most of the afternoon but rose along with the overall market to close up 7 cents, or 1 percent, at $7.05.

The job cuts follow a revamp of the bank’s top management team last week. Two senior executives, wealth management head Sallie Krawcheck and head of consumer banking Joe Price, left the bank. The bank also elevated commercial banking chief David Darnell and investment banking head Tom Montag to co-chief operating officers, reporting to Moynihan.

Bank of America is seen as one of the most bloated banks in the industry. The payroll cuts will bring its work force in line with some of its key rivals. JPMorgan Chase & Co. had 250,000 workers at the end of the second quarter.

“Financial companies have already been cutting for a few months now. He’s a little late to the game already,” said Walter Todd, a portfolio manager at Greenwood Capital, which owns Bank of America preferred shares.

The cuts are the largest by a U.S. employer this year, according to the outplacement consulting firm Challenger, Gray & Christmas Inc. Merck & Co. said this year it would cut 13,000 jobs. Bank of America’s cuts are the largest since the Postal Service announced 30,000 job cuts last year. General Motors Co. cut 47,000 jobs in 2009.
Copyright © 2011 The Associated Press, Pallavi Gogoi, AP business writer. All rights reserved.

Market Pulse Report: September 2011

 

Orlando Market Overview

• Of the 2,342 sales in August, 968 “normal” sales accounted for 41.33 percent of all sales, while 610 bank-owned and 764 short sales made up 58.67 percent.
• The 9,502 homes pending closing in August of this year is an increase of 6.23 percent compared to the 8,945 pendings in August of last year.
• Condo sales in the Orlando area decreased by 41.43 percent in August when compared to August of last year. Duplex, town home, and villa sales increased 1.34 percent.
• The median price of all existing homes combined sold in August 2011, $115,000, is a 15.12 percent increase from the $99,900 median price recorded in August 2010.
• The median price for “normal” existing homes sold in August is $155,000, a decrease of 6.57 percent from the median price of “normal” existing homes in August 2010. The median price for bank-owned sales is $81,750 and the median price for short sales is $96,950.
• The Orlando affordability index increased to 247.95 percent in August. First-time homebuyer affordability in July increased to 176.32 percent.
• Homes of all types spent an average of 101 days on the market before coming under contract in August 2011, and the average home sold for 95.05 percent of its listing price.
• The current pace of sales translates into 4.29 months of supply.
• There are currently 10,055 homes available for purchase through the MLS. The August 2011 inventory level is 39.19 percent lower than it was in August 2010.
• Orlando’s condo inventory is 51.84 percent lower than it was in August 2010.

Now is a good time to buy a house in Orlando because…

• Although many try to forecast when prices will hit bottom, the truth is that no one can predict the bottom of any market until it has already happened.

• Even within the Orlando market, different areas will “bottom” out at different times. Price fluctuations within each area of the Orlando market also differ.

• Buyers who hold off purchasing a home because they are waiting for prices to fall further may miss out on the home that they really want. The inventory of homes available for purchase, especially condos, is on a steady decline.

• Home prices have moderated, interest rates are at 40-year lows and the supply of homes for sale is plentiful. However, inventory has decreased by almost 60 percent since this time three years ago.

• Currently, about 58 percent of Orlando homes sales are foreclosures and short sales, which are typically priced much lower than “normal” homes. These types of homes sales continue to put downward pressure on the reported median or average sales price.

• Low interest rates, coupled with price declines, give trade-up buyers a unique opportunity to take advantage of market conditions. What an owner may lose on the sell side can be more than recovered on the buy side.

Florida Market Overview

• Sales, existing single-family: 15,517 in July 2011 (12 percent increase compared to July 2010).

• Sales, existing condo: 6,619 in July 2011 (12 percent increase compared to July 2010).

• Median price, existing single-family: $136,500 in July 2011 (1.00 percent decrease compared to July 2010).

• Median price, existing condo: $90,000 in July 2011 (4 percent increase compared to June 2010).

National Market Overview

• Sales, existing single-family: 4.12 million in July 2011 (21.5 percent decrease compared to July 2010).

• Sales, existing condo: 550,000 in July 2011 (17.3 percent decrease compared to July 2010).

What is a 203k Loan?

So let's start off answering what a 203k loan is: FHA offers a program called the 203k loan. It's a HUD rehab loan for home improvement, repairs and fix up. The FHA 203k loan is the perfect loan for fixing up your dream home. And right now...there's never been more homes for great prices ready to be fixed up and made into just that: your dream home!


Let's look at why it's a great time to use this loan that most Realtors don't talk about and most individuals don't know about:
 

1.      LOWEST MORTGAGE RATES IN 50 YEARS

2.      LOWEST HOME PRICES IN OVER 10 YEARS

3.      HIGHEST NUMBER OF FORECLOSURES AND SHORT SALE PROPERTIES IN HISTORY

4.      OVER 60% OF THE HOMES SOLD FOR THE PAST 12 MONTHS HAVE BEEN FORECLOSURES OR 

SHORT SALES

5.      OVER 50% OF THE FORECLOSURES OR SHORT SALES THAT ARE SOLD AND CLOSED MONTHLY ARE CASH DEALS

6.      LONGEST AMOUNT OF TIME THAT HOMES REMAIN ON THE MARKET …LEADING TO DEFERRED MAINTENANCE ISSUES LIKE LEAKING ROOFS, STOLEN APPLIANCES, GENERAL VANDALISM

7.      NO AVAILABILITY OF 2^ND MORTGAGES FOR REPAIR/RENOVATION

8.      NO RENOVATION FINANCING AVAILABLE THROUGH CONVENTIONAL OUTLETS

9.      LOWEST AVERAGE CREDIT SCORES IN HISTORY

10.  BORROWERS HAVE LITTLE OR NO DOWNPAYMENT FUNDS DUE TO THE POOR ECONOMY

11.  TIGHTEST MORTGAGE QUALIFYING PARAMETERS IN THE LAST 10 YEARS

12.  SELLERS UNABLE OR UNWILLING TO MAKE REPAIRS SO HOMES ARE OFFERED IN “AS IS” STATUS

13.  HOMES THAT ARE IN GOOD SHAPE ARE RARE AND TYPICALLY HAVE MULTIPLE OFFERS ON THEM SO YOUR OFFERS ARE GETTING OUT BID <-- This is true and very frustrating for buyers

14.  FHA, VA, CONVENTIONAL AND USDA FINANCING CALL FOR THE HOME TO MEET MINIMUM PROPERTY STANDARDS AND WILL NOT LEND ON HOMES IN NEED OF REPAIR

If it's such a great program and it works than why aren't more people taking advantage of it?

•  OVER 90% OF THE MORTGAGE LENDERS DO NOT OFFER THE FHA 203K
• MOST OF THE MORTGAGE LENDERS THAT DO OFFER THE FHA 203K DO NOT KNOW HOW IT WORKS AND CAN NOT EFFECTIVELY TAKE A BUYER FROM CONTRACT TO CLOSING
• OVER 95% OF THE REAL ESTATE AGENTS ARE EITHER NOT FAMILIAR WITH THE 203K PROGRAM OR HAVE HAD A BAD EXPERIENCE WITH IT AND DO NOT WANT TO USE IT.
• MOST BUYERS HAVE NEVER HEARD OF THE 203K PRODUCT AND HAVE NO  IDEA THAT IT CAN HELP THEM ACHIEVE THEIR DREAM OF OWNING A HOME.
• THERE HAS NEVER BEEN A SOURCE FOR REAL ESTATE AGENTS TO LEARN ABOUT THE PROGRAM AND HAVE THE CONFIDENCE IN THEMSELVES OR A MORTGAGE COMPANY TO PROPERLY HANDLE A 203K LOAN

Ask me about it. I've been trained on assisting my buyers on how to best use this as leverage for achieving their dream home!

Contact Me!

Rental market: Sweet spot in real estate

WASHINGTON – Sept. 8, 2011 – The rental market is continuing to heat up and can offer potentially big returns for buyers willing to jump into the landlord role.

For investors looking to take advantage of low record-reaching mortgage rates and big discounts on home prices, the opportunities are plenty. Rents are rising and demand is up too, partially due to the 4 million former homeowners who’ve faced a foreclosure and are now renters.

In response, more homes are turning into rentals: Nearly 35 percent of occupied homes were rented in 2010, which is a 33.8 percent increase from 2000, according to a recent study.

In more than 500 cities, demand for rentals has increased, with vacancies for rental housing reaching its lowest level since 2003, according to U.S. Census data. Plus, rents are on the rise too: Nationwide, rents increased 11.6 percent in 2010 to $1,320 a month, on average, according to Hotpads.com, a real estate research firm.

Investors are buying rental properties with the intention to hold onto it for a longer time too: On average, investors say they plan to hold onto the property for 10 years before selling, according to a survey by the National Association of Realtors®.

“Whereas leverage is dangerous when buying stocks, [buying a rental] can be a good long-term strategy with real estate,” real estate investor Marshall Sonenshine told Money Magazine.

Experts suggest the wisest move for investors is buying a property near their permanent residence and sticking to buildings with four units or fewer to avoid stricter financing requirements, such as larger downpayments and higher mortgage rates. Also, experts say rental income should cover at least the mortgage payments on the property as well as an extra 20 percent cushion to pay for any repairs, property management or get you through any vacancies.

Source: “Cashing in on Rental Property,” Money Magazine (Sept. 2, 2011)

© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688

Recent News Poll

So you know:

According to a CBS News Poll on the Housing Market, some 60% of those polled expect the value of their home to increase over the next 10 years. Some 6% expect their home to decrease in value, and 30% expect no change.