Pre-Listing Inspection Gives Sellers the Edge

Source:  MainStreet.com
Article by:  Jeff Brown

This article contains some great information for Sellers.  Finding out what needs fixing before putting your house on the market allows you take care of items that could come up during the Buyer's Inspection Period.  In Arizona, during the Inspection Period, a Buyer does his/her Due Diligence, and reports his/her findings to the Seller on a form called BUYER'S INSPECTION NOTICE AND SELLER'S RESPONSE (BINSR).  On that form the Buyer has 3 options:

• Accept the property with no corrections requested.
• Reject the property and cancel the Contract.
• Provide the Seller an opportunity to make corrections.

The Seller can agree to correct the indicated items, state that he/she is unable or unwilling to make the corrections, or give a written response as to what he will do.

See how doing a Pre-Listing Inspection can be worth the expense for homeowners.

Pre-Listing Inspection Gives Sellers the Edge

Homes Are Selling Again!

I normally don't send out two editions of Pook's E-News so close together, but today I couldn't resist, as I looked at today's "hotsheet" for activity in Paradise Valley in the last 24 hours.  Below you will see all of sales activity in PV between yesterday and today.  As you can see, homes are selling again!!  Yes, some properties are Bank-Owned or Short Sales, but there are also "normal" sales.  Activity throughout the metro area has been steadily increasing, although the high-end market has, for the most part, been very slow.  Maggie Clark of Equity Title shared the following (for all of Maricopa county) this week:

Good News!!!Total active listings have dropped to by another 2231 units over the beginning of last month. As of yesterday (3/13) we sit at 39,635 which is the lowest amount in March for the last two years!!! Sales are up to 7725 for the last month as of yesterday! We currently sit at 5.2 months of supply!

February of 2011 closings were 6535 vs. 2010 of 6158 which equates to an 6% increase over last year. Even with the tax credit last year!  (Note the numbers haven't been as good for high-end properties, but, as I mentioned, this has been a good week in PV!)

                   
CLOSED means SOLD; PENDING means an offer has been accepted; AWC-I means an offer has been accepted with Seller Instructions to keep it posted until details have been worked out (often with a bank when there is a Short Sale).  Note that #4 under PENDING is a rental, not a sale. 

5 Mortgage and Foreclosure Myths

Courtesy of Trulia

By Tara-Nicholle Nelson | Broker in San Francisco, CA

3/16/11


In a mortgage market that changes as quickly as this one, today’s fact is tomorrow’s fiction.  For buyers, misinformation can be the difference between qualifying for a home loan or not. Sellers and owners, knowledge is foreclosure-preventing, smart decision-making power! Without further ado, let’s correct some common mortgage misconceptions.


1.       Myth: Buyers with bad credit can’t qualify for home loans. Obviously, mortgage guidelines have tightened up, big time, since the housing bubble burst, and they seem likely to tighten even further over the long-term. But just this moment, they have relaxed a bit.  In the last couple of weeks, two of the nation’s largest lenders of FHA loans announced that they’ve dropped the minimum FICO score guideline from 620 (which allows for some credit imperfections) to 580, which is actually a fairly low score.


At a FICO score of 620, buyers can qualify for FHA loans at many lenders with only 3.5 percent down. With a score of 580, the lenders are looking for more like 5 to 10 percent down – they want to see you put more of your own skin in the game, and the higher down payment lowers the risk that you’ll default.  However, if your credit has taken a recessionary hit, like that of so many Americans, this might create a glimmer of hope that you’ll be able to take advantage of low prices and interest rates without needing years of credit repair.


2.     Myth: The Mortgage Interest Deduction isn’t long for this world.  Homeowners saved over $85 billion in 2008 by deducting their mortgage interest on their income tax returns. A few months ago, the National Commission on Fiscal Responsibility and Reform caused a massive wave of fear to ripple throughout the world of real estate consumers and professionals when they recommended Mortgage Interest Deduction (MID) reform, which would dramatically reduce the size of the deduction.


Fact is, the Commission made a sweeping set of deficit-busting recommendations to Congress, a few of which are likely to be adopted.  Fortunately for buyers and sellers, MID reform is not one of them.  Very powerful industry groups and economists have been working with Congress to plead the case that MID reform any time in the near future would only handicap the housing recovery.  Congress-folk aren’t interested in stopping the stabilization of the real estate market.  As such, the MID is nearly universally thought of as safe – even by those who disagree that it should be.

3.       Myth:  It’s just a matter of time before loan guidelines loosen up.  The US Treasury Department recently recommended the elimination of mortgage industry giants Fannie Mae and Freddie Mac. I won’t get into the eye-glazing details of it here, but the long and the short is that (a) this is highly likely to happen, and (b) it will make mortgage loans much harder and costlier to get, for both buyers and homeowners.   It’s possible that loans are as easy to get as they’re going to get.  So don’t expect that if you hold out, zero-down mortgages will come back into vogue anytime soon. Fortunately, Fannie and Freddie aren't likely to disappear for another 5-7 years, so you have a little time to pull your down payment and credit together. If you want to get into the market, the time to get yourself ready is now!


4.       Myth: If you don’t have equity, you can’t refi. Much ado is being made about how stuck so many people are in their bad loans, because they don’t have the equity to refinance their way out of them.  If you’re severely upside down (meaning you own much, much more than your home is worth), stuck may be the situation. But there are actually a couple of ways homeowners can refi their underwater home loans.  If your loan is held by Fannie or Freddie (which you can find out, here), they will actually refinance it up to 125% of its current value, assuming you otherwise qualify for the loan.  That means, if your home is worth $100,000, you could refinance a loan up to $125,000, despite the fact that your home can’t secure the full amount of the loan.


If your loan is not owned by Fannie or Freddie, you might be a candidate for the FHA “Short Refi” program. While most mortgage workout plans are only available to people who are behind on their loans, the Short Refi program is only available to homeowners who are current on their mortgages and need to refinance up to 115 percent of their homes’ value.  So, if you owe $250,000 on your home, you can refinance via an FHA Short Refi even if your home’s value is as low as $217,000. If you think you’re a good candidate for a short refi, contact your mortgage broker, stat – there are some in Congress who think that this program is so underutilized (only 245 applications have been submitted since it rolled out in September – no typo!) that its funding should be diverted to other needy programs.

5.       Myth:  If you’ve lost your job and can’t make your mortgage payment, you might as well mail your keys in.  Until recently, this was essentially true – virtually every loan modification and refinancing opportunity required that your economic hardship be over before you could qualify. And documenting income has always been high on the requirements checklist. But there are some new funds available in the states with the hardest hit housing and job markets, which have been designated specifically for out-of-work homeowners.


The US Treasury Department’s Hardest Hit Fund allocated $7.6 billion to the states listed below – all of which are now using some portion of these funds to offer up to $3,000 per month for up to 36 months in mortgage payment assistance to help unemployed homeowners avoid foreclosure.  Contact the state agency listed below if you need this sort of help:

• Alabama: http://www.hardesthitalabama.com/
• Arizona: https://www.savemyhomeaz.gov/
• California: https://www.keepyourhomecalifornia.org/
• Florida: https://www.flhardesthithelp.org/
• Georgia: http://www.dca.state.ga.us/housing/homeownership/programs/hardesthitfund.asp
• Illinois:http://www.ihda.org/
• Indiana: http://www.877gethope.org/
• Kentucky: http://www.kyhousing.org/
• Michigan: http://www.michigan.gov/mshda/buyers/save_the_dream/helping+hardest+hit+homeowners+-+contact+your+mortgage+servicer+for+assistance
• Mississippi: http://www.mshomecorp.com/firstpage.htm
• Nevada: http://www.nahac.org/
• New Jersey: http://www.state.nj.us/dca/hmfa/home/foreclosure/homekeepers.html
• North Carolina: http://www.ncforeclosureprevention.gov/
• Ohio: http://www.savethedream.ohio.gov/
• Oregon: http://www.oregonhomeownerhelp.org/
• Rhode Island: http://www.hhfri.org/
• South Carolina: http://www.scmortgagehelp.com/
• Tennessee: http://www.thda.org/
• Washington D.C.: http://www.dchfa.org/

If Prices Are Falling, Why Are the Rich Buying?

Courtesy of Keeping Current Matters/The KMC Blog
Posted: 14 Mar 2011 05:00 AM PDT


There is an interesting phenomenon taking place in the real estate market. While house prices are falling, the rich are starting to purchase. DataQuick Information Systems reported last week that sales on homes $1 million or more rose 18.6% last year after four consecutive years of decline. This is at the same time that sales outside of this price point actually fell 2.8%.
And even more amazing is that homes over $5 million have also increased substantially. Housing Wirereported that:

In 2010, 975 homes sold in this bracket, up nearly 14% from the year prior.

Why would the wealthy be starting to purchase especially when everyone is predicting that prices will soften? The people of wealth understand finances. They realize that the COST of real estate is a much more important than its PRICE. With the government attempting to make massive changes to the residential lending business, the wealthy know financing  a home may never be better. They realize it is time to buy. They can purchase a million dollar+ home for a rate lower than at almost any time in history.
Rates are at historic lows and the spread for jumbo loans has shrunk dramatically. As CNN Money explained:

Normally buyers have to take out a jumbo loan to finance any mortgage beyond the $417,000 threshold ($729,000 in high-cost cities such as New York). These loans have higher interest rates because they are considered non-conforming — or higher risk — and are not backed Fannie Mae or Freddie Mac.
In 2009 buyers of high-end homes paid 1.8 percentage points more in interest than the average buyer. But in 2010, that spread had shrunk to just 0.6 points more.

They can also fix that rate for 30 years. The 30-year-fixed-rate-mortgage may be a victim of the new lending reforms. Mark Zandi, chief economist of Moody’s Economics addressing the administration’s recent report on reform:

“A private system would likely mean the end of the 30-year fixed-rate mortgage as a mainstay of U.S. housing finance. A privatized U.S. market would come to resemble overseas markets, primarily offering adjustable-rate mortgages.”

Bottom Line

Let’s assume the rich aren’t just lucky. Let’s assume they built their wealth by making good financial decisions. What have they decided about real estate? It’s time to buy.

How's the market?

The temptation was great to include a recent article I had read about the national housing outlook which discussed the continuing lowering of home prices.  However, the news here in the Valley is better than the broad reports we are seeing and I feel it is more important to provide the local outlook.  As I always tell people, the answer to the question, "How's the market?" varies by location... not just by state, but by city and neighborhood.  Our local guru, mathematician Michael Orr, offers an update on the Phoenix market twice a month (in addition to weekly reports specific to local cities).  His most recent update can be found at my website, but here is a part of that update:

They (prices) are the very last indicator to turn round at both the top and bottom of a cycle. The indicators you should watch instead are behaving in very interesting ways at the moment. Most of these ways are very positive. Nothing is certain in this world but the current trends are pointing to another market recovery attempt, similar to the one we saw in 2Q 2009.
 
Supply
We measure supply using active listing counts. These are coming down fast in many (but not all) areas. The total number for all areas & types in ARMLS residential resale as of March 1 was 40,240. On February 1 this was 42,522 so we are down 5.6% in a single month. Last year on March 1, we had 42,139, so we are down 4.5% in 12 months. This latter number doesn't sound very impressive, but supply was growing last year from June through November, peaking at 45,960 on November 20. Supply has fallen by 12.5% since November 20 and this is a definite signal that overall supply is now on a strong downward trend.

Demand
We measure demand using two primary indicators - recent sales and pending listings - and we also keep a watchful eye on total listings under contract (i.e. pending plus AWC). At the moment we are recording 7,155 sales (all areas & types) during February 2011. This is 8.6% higher than January and 11.4% higher than February 2010. Not too shabby. In fact this is the second highest February sales total for ARMLS (Feb 2005 came top). Pending listings were 11,997 on March 1, up 13.6% from February 1 and 1.8% below March 1, 2010 when we in the grips of tax credit buying fever. These are good demand numbers. 

Supply vs. Demand
Demand is strong and supply is falling, so that ought to be good for the market. However sentiment is still very negative after the double dip price drop during the second half of 2010 and it always take several months for an improvement in the market balance to be reflected in pricing.

Mortgage Purchase Activity at Highest of Year

Courtesy of RealtorMag.org
Daily Real Estate News  |  March 9, 2011  

Mortgage applications for purchases rose to their highest level of the year last week, the Mortgage Bankers Association reports. Purchase applications for mortgages increased 12.5 percent from one week earlier, and on an unadjusted basis, purchase application activity is the highest since last May.

“An improving job market is beginning to pave the way for an improving housing market,” says Michael Fratantoni, MBA's vice president of research and economics. “Additionally, mortgage interest rates remained below 5 percent for a second week, maintaining affordability for buyers and leading to an increase in refinance applications."

Refinancings also were on the rise last week, increasing 17.2 percent from one week prior. It was the highest the Refinance Index had been in over a month.

Overall, mortgage applications increased 15.5 percent on a seasonally adjusted basis for the week ending March 4, compared to one week prior, according to MBA.

Source: “Mortgage Applications Increase in Latest MBA Weekly Survey,” Mortgage Bankers Association (March 9, 2011)

Big Jump in Private Jobs Bolsters Recovery Hope

Source:  The New York Times (3/5/11)
By Catherine Rampell

The U.S. economy added 192,000 jobs in February, in line with expectations, the fastest job growth since last spring. The rate of unemployment ticked down to 8.9 percent.

The economic waiting game may soon be over, as businesses signal that they are finally willing to resume widespread hiring.

Source: Bureau of Labor Statistics 

In all, the nation added 192,000 jobs in February, a big jump from the 63,000 added the previous month, the Labor Department reported on Friday.

The job growth was the most in nearly a year, and the 12th consecutive month of gains by companies, which added 222,000 workers last month. It followed an unusually weak report in January, when major snowstorms across the country prompted offices and factories to close. 

Taken together, the first two months of the year produced growth at about the same pace as last fall.  Economists say they are hopeful the pace will soon pick up further.

“Economic recoveries can be like a snowball rolling down a hill, in that it takes time to get some momentum,” said John Ryding, chief economist at RDQ Economics. “People hesitate until they feel that the recovery’s durable enough, and then they have a tendency to jump in. Maybe we’re finally getting to that jumping-in moment.”

Threats to a more robust recovery remain, of course, including a surge in energy and food prices, with the possibility of disruptions in oil production in the Middle East continuing to weigh on the financial markets. State and local governments are also shedding jobs, which depressed the total for February, as they grapple with budget woes.

But for now, the improvement is notable. The unemployment rate ticked down to 8.9 percent last month, falling below 9 percent for the first time in nearly two years. This rate, which comes from a survey separate from the payroll numbers and is based on the total number of Americans who want to work, has remained stubbornly high the last year. Altogether, 13.7 million people are still out of work and actively looking.

Economists say the unemployment rate could rise temporarily in the next few months, as stronger job growth lures some discouraged workers to look for jobs again. Right now, just 64.2 percent of adults are actively involved in the work force, meaning they are either in a job or actively looking for one. That is the lowest participation rate in 25 years, an indication that many Americans are either staying home, going back to school, raising children or otherwise waiting for better conditions before applying for work.

“It’s a puzzle, a genuine puzzle why that number has been stuck,” a senior economist at Credit Suisse, Jay Feldman, said. “I expect it to recover somewhat in the coming months as the labor market improves and more people become encouraged about their job prospects.”

Other recent economic reports — like those on unemployment claims and manufacturing — have pointed to stronger demand for workers. The Federal Reserve, in a survey of its 12 districts, noted on Wednesday that the labor market had improved modestly, but the Fed chairman, Ben S. Bernanke, told lawmakers that “until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.”

The unemployment rate has fallen from a peak of 10.1 percent in this downturn. A broad measure of unemployment, which includes people working part time because they cannot find full-time jobs and those so discouraged that they have given up searching, dipped to 15.9 percent in February, from 16.1 percent in January.

Job gains appeared in nearly every industry last month. Among the biggest winners were the manufacturing, construction, and professional and business services industries. Construction payrolls bounced back from a very low level in January, when severe snowstorms hindered activity.  “In some cases it’s very hard to judge how big the underlying improvement there is in this data,” said Nigel Gault, chief United States economist at IHS Global Insight.

State and local governments, squeezed by revenue shortfalls and a reluctance to raise taxes, again laid off workers. Local governments have eliminated 377,000 jobs since September 2008, when their employment last peaked.

“There’s no work out here,” said Julio Santiago, 33, a mechanic who repaired police cars and sanitation trucks for the city of Newark before he was let go last November.

He and his wife, who has been job-hunting for two years, have canceled their children’s summer camp plans, cut out cable and Internet, borrowed from friends and even given away the family dog to make ends meet.

“The only work they have is only temporary work, or one or two days a week, and I can’t afford to do that,” Mr. Santiago said. “Plus they told me they may cut my unemployment benefits if I take those jobs, even if they know I’m only getting to work a few hours a week.”

Federal payrolls were unchanged in February, but federal employees may also be at risk of significant layoffs if Republican leaders in Congress are successful with their proposed budget cuts. Economists at Goldman Sachs and elsewhere have warned that such budget cuts could ripple through the economy and lead to layoffs in the private sector. “I am optimistic we can get to a bipartisan budget agreement, whereby the government is on a path to staying within its means without derailing the recovery and slowing the job creation engine,” said Austan Goolsbee, chairman of President Obama’s Council of Economic Advisers. “What we cut, and how, matters.”

Rising prices for energy and food also remain a risk to job growth, economists say, as they leave less money for consumers and businesses to spend on other purchases that could potentially spur hiring. 

The contract for future delivery of light sweet crude oil rose to $104.42 a barrel on Friday, an increase of nearly $7 for the week, depressing the major stock indexes, which were down less than 1 percent on the day.

Many economists forecast that job growth will pick up later this year to a rate of more than 200,000 a month. While that would be a welcome development compared with the modest growth in January and the bloodletting during the recession, it still is not fast enough to recover much of the ground lost.

Since the downturn began in December 2007, the economy has shed 7.5 million jobs, or about 5.4 percent of its nonfarm payrolls. If the country adds 200,000 jobs every month, it would take more than three years to return to the employment level before the recession. And that does not take into account the fact that the working-age population has continued to grow — meaning that if the economy were healthy, it would have more jobs today than before the recession.

While gains by industry have been relatively widespread, the benefits to workers themselves have not been as universal. Workers who have already been unemployed for months or even years, for example, have had trouble getting employers to consider them. As a result, even though those out of work a few weeks have gotten new jobs, the average duration of unemployment has climbed to the unusually high level of 37.1 weeks. Many of these long-term unemployed are older workers who are considering giving up and could permanently leave the job market.

Men and women have also been affected differently by the recovery.  While men bore the brunt of job losses in the recession, requiring more women to serve as their family breadwinners, that has since changed. In the last year the share of men with jobs has risen and the share of women with jobs has fallen. In fact, the portion of women working declined to 53.2 percent in February, the lowest share since 1988.
A version of this article appeared in print on March 5, 2011, on page A1 of the New York edition.