Eric Harlington's Blog

New Homeowners: How to Save $$$

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Tue, 14 Feb 2012 16:44:20 -0800

There are a lot of benefits to owning your own home and in today’s market; it has never been more affordable. Not having to work with landlords, landscaping your own backyard and painting your house as you deem needed— what could be more exciting than making the jump from renter to first-time homeowner? Getting swept up in all the excitement is a wonderful feeling; however being a homeowner can be a little daunting.

When you first buy is the perfect time to walk through a checklist of ways to make your home comfortable, while keeping an eye your for your finances. In a recent article I read on contractor Danny Lipford, and Honeywell Home Environment, I thought these tips to offer added comfort and money savings tips for new homeowners was something to share.

Volatile Organic Compounds (VOCs) are harmful gases that can be emitted by some paints, solvents, cleaners, adhesives, furniture, and shelving. When using products that contain high levels of VOCs, open windows or, better yet, turn on an air purifier that has a VOC pre-filter to help remove VOCs from the air that passes through the unit.

Set back your thermostat about 10 degrees when you’re away from home for 8 hours or more. You could shave as much as 10 percent off of your energy bill without sacrificing comfort. When you are at home, try turning down the thermostat a few degrees and use a portable heater in the rooms you are in the most. You’ll save money and stay warm!

Don’t forget homes need water too—that’s where humidifiers help. Humidifiers offer solutions during the dry winter months to help protect valuable wood furniture from drying out and cracking and prevent wood floors from buckling and separating.

Pollutants like dust and mold that settle in the home can be attributed to poor air circulation. A whole room fan should be used to ventilate the home properly.

Obama Moves Forward with Foreclosure Prevention

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Tue, 07 Feb 2012 12:42:44 -0800

I found this article to be very interesting and thought I would throw it out tehre and see what some of your thoughts are:

Last Wednesday, February 1, President Obama announced the details of a plan to help homeowners refinance their mortgages in hopes of bolstering the housing market.

According to the U.S. Department of Housing and Urban Development, this proposal will allow buyers to save an average of $3,000 a year by refinancing into loans backed by the FHA, if they are current on their mortgage. The plan is estimated to cost between $5 billion and $10 billion, which Obama plans to cover by pressing a fee on large banks.

“I want to commend the administration for recognizing that more can be done to get our housing market on track. The programs announced today will give lenders and other stakeholders additional tools to help borrowers and foster a renewed confidence in our real estate finance system,” said David H. Stevens, President and CEO of the Mortgage Bankers Association, in a statement issues on February 1. Stevens went on to note that the MBA believes a single national set of standards can help provide confidence and certainty in the real estate market for borrowers, lenders and servicers alike.

Bob Nielsen, chairman of the National Association of Home Builders, issued a similar statement.“Clearly, more decisive actions are needed to increase refinancing opportunities, to reduce the inventory of foreclosed homes and to prevent additional homes from going into foreclosure,” stated Nielsen, who says that the NAHB looks forward to working with the Administration and Congress to find constructive solutions in these areas as soon as possible.

This refinancing plan is the most recent addition to Obama’s foreclosure prevention efforts, following the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP).

Reports have indicated that the plan faces long odds in Congress. House Speaker John Boehner (R., Ohio) questioned why this program would work when others have failed.

“One more time? One more time? How many times have we done this?” he asked reporters. “I don’t know why anyone would think that this next idea is going to work.” He added that the previous programs have led to a delay in “the clearing of the market,” or letting housing prices hit bottom by allowing foreclosures to happen more rapidly.

Posted By susanne On February 6, 2012 @ 5:01 pm In Business Outlook,Consumer News and Advice,

2012: year of the investor

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Tue, 31 Jan 2012 14:17:56 -0800

In this new market, real estate professionals need to rethink some of their prior customer service techniques to accommodate new trends, and restructure their marketing policies.

Home prices will likely bump along the bottom before a sustained upward trend arises. The recovery we’re witnessing isn’t Permanente and lower prices won’t be around indefinitely. Eventually unparalleled buyer’s market will pass, investors are going to be taking full advantage of this years market.

It is estimated that nearly 20 percent of homebuyers own two or more homes—a percentage that, prior to the downturn, was typically around 11 or 12 percent. The downturn has prompted people to think more about building long-term wealth and stability, and they’re realizing real estate is still a resilient choice. More and more everyday people are taking steps to secure one or two rental properties or an investment home.

The conditions in the U.S. housing market are no secret around the world, and it has drawn heavy interest from investors. International buyers purchased more than $82 billion in U.S. real estate. The average price they paid was $315,000 compared to $215,000 paid by native buyers.

Within this year, international and domestic investors are expected to push forward with the recovery, so it’s important to take immediate action to accommodate this key set of buyers. This may mean getting more training, or further Certifications. By keeping your eye on the pulse of the country as a whole and the influence of various groups on the real estate industry specifically, you’ll find your way no matter how the trends shift. It is important to know your environment and this trend of investment buying will be one that dominates 2012. As a professional in my field I know for my team this includes re-evaluation of marketing and customer service strategies in order accommodate what is sure to be the bulk of our customers in the upcoming months.

Success Strategies

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Wed, 25 Jan 2012 16:08:45 -0800

Being connected 24/7 was supposed to make our lives easier, but it seems as though that’s not the case. Real-estate professionals, especially in this economy often feel that they didn’t get enough done in a day. Being connected in this industry often means responding to work e-mail on our smartphones right up until we go to bed. I recently found an article that addresses this issue and offers advice for all of us to be more productive during the day and help us establish that line between the end of the work day and beginning of our time off.

There’s a lot pressure to do more and more with less and you want what you do to really be effective.

It’s not about how hard you’re working, as we probably know there are a lot of very diligent people who aren’t as productive as they could be because of the way they manage their time.

Always be prepared for extra time. This is a great strategy for increasing productivity. Bring small chunks of work with you wherever you go. Then, while waiting for a meeting to start or for a delayed flight to depart, you’ll be able to reply to an e-mail or make a phone call. In other instances, you might have enough time to review materials for another meeting or project you are working on. If you’re prepared, you can also confirm appointments, draft responses, or map out a project outline.

Change how you manage e-mail. The moment you click on your inbox, your focus goes and your stress grows, as you proceed to delete, respond, forward, and file the messages you find there. You see names and subject lines and suddenly your mind starts racing; all you can think of are the latest projects and the high-priority work that shows up. If you’re not careful, all you’ll do all day is manage your e-mail.

Rather than simply flag e-mails that require action, use the subject lines to catalog and organize them. Also, don’t look at your e-mail unless you have a block of time to devote to prioritizing them and responding to them. When you are going through your e-mail, use subject lines to catalog them and organize them so that you’ll easily be able to go back to less urgent e-mails later on.

Identify the VERBS that need attention. Organize your to-do list by verbs in order to manage your productivity in terms of action, delegation, and progress. Actions such as call, draft, review, and invite are things that you can do, generally in one sitting, that have the potential to move the project forward one step at a time.

We all want to enjoy what we do every day, the problem lies when people are too overwhelmed to make the key changes that will help them. There is no reason to remain mired in frustration and struggling to catch up. With just a few key changes, you can work in a way that feels really good.

Single-Family Housing Starts Rising

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Mon, 23 Jan 2012 19:07:15 -0800

Nationwide production of new single-family homes rose 4.4 percent to a seasonally adjusted annual rate of 470,000 units in December, according to newly released figures from the U.S. Commerce Department. This marked a third consecutive increase and the fastest pace of single-family housing starts since April of 2010. Meanwhile, the overall number of housing starts for the month declined 4.1 percent to a 657,000-unit rate due to a 20.4 percent dip on the more volatile multifamily side.

Today’s report adds to the growing evidence that demand for new, single-family homes is finally starting to firm up in an increasing number of markets nationwide. This emerging trend is allowing builders to put more crews back to work, and could be even stronger if not for the overly tight credit conditions that prevail for both builders and buyers, as well as the continuing foreclosure crisis and the challenges of obtaining accurate appraisal values on new homes. Policymakers should be doing everything possible to alleviate these problems and nurture the fledgling housing recovery in order to promote job and economic growth.

This report is in keeping with our expectations for slow but steady improvement in the single-family market, where production hit its lowest yearly rate in over 50 years in 2011. Meanwhile, it should be noted that the decline in multifamily starts in December was coming off a dramatic increase from the previous month and simply brought that sector back closer to trend. Apartment production generally continues to gain strength heading into 2012 after posting a more-than 50 percent gain in 2011. Looking forward, NAHB is forecasting gains of approximately 17 percent in both single- and multifamily housing production in 2012.

Permit issuance, which can be an indicator of future building activity, held virtually flat at a 679,000-unit rate in December. Single-family permits rose for a third consecutive month, by 1.8 percent to 444,000 units, while multifamily permits declined 3.7 percent to 235,000 units.

Mortgage Rates Continue Trend of Record-Breaking Lows

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Mon, 16 Jan 2012 15:47:20 -0800

Freddie Mac recently released the results of a recent survey displaying mortgage rates falling to new all-time record lows for all products enclosed in the survey helping to keep homebuyer affordability high. The average for the 30-year fixed mortgage rate has been below 4.00 percent for six consecutive weeks.

The survey concluded that the 30-year fixed-rate mortgage averaged 3.89 percent, with an average 0.7 point for the week ending January 12, 2012, down from last week when it averaged 3.91 percent. Last year at this time, the 30-year FRM averaged 4.71 percent.

The 15-year FRM this week averaged 3.16 percent with an average 0.8 point, down from last week when it averaged 3.23 percent. A year ago at this time, the 15-year FRM averaged 4.08 percent.

Additionally, the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.82 percent this week, with an average 0.7 point, down from last week when it averaged 2.86 percent. A year ago, the 5-year ARM averaged 3.72 percent.

Results showed that the 1-year Treasury-indexed ARM averaged 2.76 percent this week with an average 0.6 point, down from last week when it averaged 2.80 percent. At this time last year, the 1-year ARM averaged 3.23 percent.

Mortgage rates eased slightly this week to all-time record lows following mixed indicators in the labor market,” says Frank Nothaft, the vice president and chief economist of Freddie Mac. “Although the economy added 1.6 million jobs in 2011, which was the most since 2006, the unemployment rate remained historically elevated.

For more information, visit www.freddiemac.com

By susanne On January 15, 2012

Mortgage Standard Rules

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Thu, 12 Jan 2012 17:56:37 -0800

The Federal Reserve just suggested demanding banks to make certain that debtors can repay their mortgages before they give them a loan. This may sound clear-cut and not uncommon, but there are a few specifics that I thought were of interest.

This rule is currently required by the Dodd-Frank Act, and it establishes minimum mortgage underwriting standards. Borrowers could essentially sue lenders if a suitable effort isn’t engaged to warrant they can repay the loan.

This allows lenders to make a qualified mortgage, a loan that meets standards that allow it to escape the liability associated with the provision.

The proposal is a reaction to a surge of falsified loans that lenders offered in the years leading up to the current economic crisis. Lenders in many of these cases asked borrowers to state their income without verifying whether they could afford the loan. This then had a key part in the wave of foreclosures, which then contributed to the crisis.

One specific qualified mortgage outlined in the proposal authorizes lenders special protection from borrower suits if the loan doesn’t have certain features such as negative amortization, which is where the loan balance increases because payments are made that fail to cover the interest due. The process of writing rules based on the Fed’s proposal is scheduled to transfer to Consumer Financial Protection.

The Dodd-Frank Act requires the creation of the bureau, which will write rules for mortgages and other consumer credit products.

Stabilizing Predicted in 2012

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Wed, 11 Jan 2012 17:44:12 -0800

Home prices this year stopped their decline and gain momentum across all markets as more and more individual markets stabilize.

Though national prices will be level, the majority of markets are estimated to stabilize in 2012. Clear Capital recently reported a 2.1 percent year-over-year decrease in 2011 that was reinforced by a leveling of prices in the latter half of the year and decreasing REO saturation.

2011 was reported as a comparatively unobtrusive year for home prices compared to the last five years, national prices were down a little more than the past year and sitting at their bottommost point since 2001.

markets reacting to their limited economic drivers show a wide range of performance levels, the national numbers suggest markets are flat, but when looking at individual metro markets it turns out only 24 percent of them showed signs of stabilization in 2011, while the others are still moving more dramatically higher or lower. Lower segments of rising markets are driving much of the current price growth.

Prices weakened in December on a quarter-over-quarter basis, showing the markets giving back some of the gains of the summer buying season. The most recent six months of the year saw national home prices flat.

While national numbers for December fell somewhat, half of the major markets covered saw quarterly gains. In addition to the relatively flat home price performance, saturation rates at the end of 2011 reached a new yearly low at 24.8 percent. REO saturation was volatile early in 2011, and showed consistent declines and stability toward the latter half of the year.

2012 is likely to play out much like the last half of 2011, with a very subtle price change. A minimal decline in the beginning of the year is expected to turn into a slight gain by year’s end. Half of the 50 major metro markets are expected to post gains for the year, and individual metros will experience the full range of price movement, from double-digit growth to double-digit drops.

The prediction for 2012 shows home prices starting with a dip in the first quarter, improving in the spring and summer buying season, and continuing to climb to 0.2 percent overall progress for 2012.

Recovery Found in Increased Lending, Loan Modifications and Short Sales

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Wed, 11 Jan 2012 01:07:43 -0800

I found this article recently and thought I would share:

The white paper, The U.S. Housing Market: Current Conditions and Policy Considerations, calls for increased lending to creditworthy home buyers and more loan modifications, mortgage refinancings, and short sales to reduce the rising inventory of foreclosed homes and help stabilize and revitalize the housing industry; an approach long recommended by NAR to help spur the housing market recovery.

“As the nation’s leading advocate for homeownership and housing issues, NAR knows that a strong housing market recovery is key to the nation’s future economic strength,” says NAR President Moe Veissi. “Improving access to affordable mortgage financing for qualified home buyers and investors and aggressively pursuing more loan modifications and short sales is necessary to help reenergize the housing market and spur an economic recovery.”

The pendulum on mortgage credit has swung too far following the housing downturn. According to the 2011 NAR Member Profile, 34 percent of REALTORS® reported that the most important factor in limiting their clients’ ability to buy a home was difficulty in obtaining a mortgage. While NAR supports responsible and strong underwriting standards, unnecessarily tight credit restrictions are keeping many qualified home buyers from purchasing homes, which could help absorb excess inventories of homes in foreclosure.

“Creditworthy consumers continue to have difficulties securing affordable financing despite their proven ability to afford the monthly payments,” says Veissi. “Expanding financing opportunities to qualified buyers could help reduce distressed property inventories, minimize the negative impact those homes have on local markets and restore vibrant housing markets and neighborhoods.”

To prevent further foreclosure inventory increases, NAR also urges lenders to take more aggressive steps to modify loans and keep struggling families in their homes. Significantly reducing monthly mortgage payments will help more families remain current on their mortgage and allow them to remain in their home, reducing the impact of foreclosures on local home prices.

For homeowners who are unable to meet their mortgage obligations, NAR has urged lenders and servicers to quickly approve reasonable short sale offers so these people can avoid foreclosure. The short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from the transaction.

“Loan modifications and short sales help stabilize home values and neighborhoods, and limit the losses incurred by lenders, the federal government and taxpayers, which is good for everyone,” says Veissi.

The Fed paper also addresses converting foreclosed properties into affordable rentals. NAR supports reducing the barriers that prevent owner-occupants and small investors from accessing financing, such as opening the Federal Housing Administration 203(k) program to investors. NAR also believes these efforts are best made by local entities that understand the challenges of the local community and will respond to renters’ needs.

In addition, NAR is concerned about proposed bulk sales of distressed properties and believes that every effort should be made increase liquidity for consumers and small investors since bulk sales will likely result in greater losses for taxpayers and have a more negative impact on housing values.

Actions on Housing Policy Will Make or Break Recovery

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Thu, 29 Dec 2011 14:20:59 -0800

I stumbled upon this interesting article today By Margaret Kelly and thought I would share it.

We have many reasons to be optimistic about housing. Past-due mortgages and foreclosure filings have been trending down in recent months, not to mention inventory is decreasing, interest rates are lower than ever and home prices are stabilizing. But the progress is fragile, and ongoing recovery won’t be helped by unreasonable regulation. The only appropriate focus for legislators is helping families who are struggling right now and doing whatever it takes to keep properties out of the REO market.

Recent steps to provide distressed homeowners with more viable alternatives to foreclosure, such as easier refinancing through the Home Affordable Refinance Program (HARP), and ongoing streamlining of short sales by major lenders, are important steps in the right direction—and at the right time.

Lawmakers have the power to either continue helping or risk hurting the economy with their decisions on housing. It’s important they hear the message that housing needs focused attention to gain real traction toward sustained recovery, which really is in the best interest of the entire economy. I urge you to contact your representatives to offer your professional opinion on what it’s going to take to make the turnaround stick.

Mission Critical

There’s no more important goal than keeping families in their homes if they have a reasonable ability to pay the mortgage. The Obama administration’s executive order to allow homeowners to refinance their government-backed loans under HARP, regardless of how much value a home has lost in the downturn, sets a great example for other major lenders. And by following suit, the big banks can avoid flooding the market with costly foreclosures and avoid jeopardizing consumer confidence.

More importantly, homeowners who’ve had to cut back in these lean times can save hundreds of dollars a month on their mortgage payments with previously denied access to historically low interest rates.

Next Best Thing

In cases where homeowners have no reasonable ability to pay their mortgage because of unemployment, illness or other personal challenges, a short sale should be the first consideration. Next to lenders needing to continue ramping up their abilities to handle short sales, one of the biggest obstacles to closing these life-changing transactions is educating homeowners about the option. More lenders are being proactive in contacting homeowners who are at risk of default and outlining alternatives to foreclosure, such as short sales. Plus, in many cases, these homeowners are being introduced to one or more trained real estate agents who can help them through the process.

With short sales becoming increasingly commonplace (Bank of America reported recently that its yearly total of short sales has more than doubled since 2009), it’s more important than ever for real estate professionals to promote their expertise in distressed properties and their willingness to help. The key for any agent who’s interested in taking part in the short sale solution is getting appropriate training, such as the Certified Distressed Property Expert (CDPE) designation or the NAR Short Sales and Foreclosure Resource (SFR) certification.

Economists and real estate leaders alike agree that foreclosure alternatives are going to make the difference between needless struggle and real recovery. And as lawmakers and lenders become wiser to this reality and the primary task, refinancing and short sales will play a major role in pulling us out of the current downturn and pronounced cycle of foreclosures.

I would love for the opportunity to hear from some of you on these issues!

It May be The Perfect Time to Buy a Home!

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Wed, 28 Dec 2011 17:00:43 -0800

It’s no secret that the housing market has been discouraging for the last several years. An unclear amount of info about rising and falling mortgage rates has solidified the market all but unreachable for a lot of potential home buyers.

Whether you’re looking for a long-term residence or as an income property, the market is looking its best it has in a few years. Low mortgage rates are making houses inexpensive. One of the utmost concerns facing you as a prospective homebuyer is whether you can even secure that low rate mortgage. Lenders have had to tightened standards, requiring steeper down payments. some economists think that these tighter standards for lenders might be changing.

Conventional knowledge shows that owning is better than renting. Renters have been seen as throwing money away because they aren’t accumulating equity in a property. With shifting interest rates and high property costs, in recent years, renting hasn’t necessarily been a bad option. As a result of the recent housing recession, many potential owners have been renting instead.

There is change taking place right now as the market is trending in favor of buyers. House payments are becoming more reasonable than any time in the recent past. Most importantly homeowners can get more for their money.

If you’re in a place to buy a home you are going to settle into for the long term, or whether you’re looking for a profitable investment, a thoughtful approach is key. For investors, the recently popular practice of flipping a property should be approached with the greatest amount of caution and knowledge.

Investing in real estate has long been a profitable and rewarding endeavor. Just don’t forget to do your homework. You should also take the opportunity to call on an expert. I know that within my office, providing the most informative materials to prospective buyers is of the ut most importance, and with good reason, since buying a home is a major decision in any person’s life.

Builder confidence Goes up!

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Tue, 20 Dec 2011 19:44:03 -0800

Builder confidence in the market for newly built, single-family homes edged up from a downwardly precedent according to the National Association of Home Builders Housing Market Index for December. This marks a third consecutive month in which builder confidence has improved, and brings the index to its highest point since May of 2010.

While builder confidence had remained low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets according to the National Association of Home Builders. However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving.

This is the first time that builder confidence has improved for three consecutive months since 2009, which signifies a legitimate though slowly emerging upward trend. While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months.

According to a monthly survey that NAHB has been conducting for more than 20 years, the Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months. The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Each of the HMI’s three component indexes registered a third consecutive month of improvement in December. The component gauging current sales conditions rose in the latest month, while the component gauging sales expectations in the next six months edged up even further. The component gauging traffic of prospective buyers also gained, which is its highest level since May of 2008.

Builder confidence primarily gained strength in the South in December its highest level since March of 2008.

Fixed-Rate Mortgage Matches Record Low

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Sun, 18 Dec 2011 18:32:37 -0800

Freddie Mac recently released some results indicating that average fixed mortgage rates are at or near their all-time lows. The 30-year fixed matched the average all-time record low of 3.94 percent, and a new all-time record low was set for the 15-year fixed. The five-year ARM also set a new all-time record low at 2.86 percent for the week.

30-year fixed-rate mortgage averaged 3.94 percent with an average 0.8 point for the week ending December 15, 2011, down from the previous week when it averaged 3.99 percent. Last year at this time, the 30-year FRM averaged 4.83 percent.

Five-year, Treasury-indexed hybrid adjustable-rate mortgage averaged 2.86 percent this week, with an average 0.6 point, down from last week when it averaged 2.93 percent. A year ago, the five-year ARM averaged 3.77 percent.

Mortgage rates were at or near all-time record lows this week within a rough environment for housing. In its December 13th monetary policy announcement, the Federal Reserve reiterated the housing market remains down. Over the first nine months of 2012, households lost almost $400 billion in property values which contributed to a $1.4 trillion reduction in overall net worth, according to Freddie Mac.

According to the Mortgage Bankers Association, serious delinquency rates on mortgages increased slightly between June 30 and September 30 of the year, breaking a six-quarter consecutive decline.

Residential Mortgage Defaults, Lower Than a Year ago

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Wed, 14 Dec 2011 18:18:48 -0800

The UFA Default Risk Index for the fourth quarter of 2011 edged lower from last quarter, which suggests that residential mortgage default and prepayment risks are continuing their return to normalcy.

According to the latest UFA Mortgage Report by University Financial Associates, the stage is set for a recovery in the housing market. Under current economic conditions, investors and lenders should expect defaults on loans currently being originated to be only 31 percent higher than the average of loans originated last century, due solely to the local and national economic environment.

Despite continuing high unemployment, our Default Risk Index has improved; which is a great sign for the housing market and the economy as a whole. Consumer balance sheets have improved and mortgage rates are at record lows, it seems as though the setting is set for a recovery in the housing market.

UFA’s analysis is based on a loan with the same borrower, loan and collateral characteristics. The index reflects only the changes in current and expected future economic conditions, which are less favorable currently than in prior years.

A recession causes an erosion of both borrower and collateral performance. Borrowers are more likely to be subjected to a financial shock such as unemployment and, if shocked, will be less able to withstand the shock. Fed easing of interest rates has the opposite effect.

So what is your take? Have you seen improvement in your local market to either confirm or deny some of what you see hear?

Helping Sell Your Home, The Benefits of Staging

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Mon, 12 Dec 2011 16:17:00 -0800

Taking time to neuter the home before it goes on the market by getting rid of the chaos, opening up corridors, living spaces and walls, lightening bold colors and exposing hidden pieces of charm and architecture goes a long way. A seller’s taste in decor and the lovingly acquired pieces can potentially, clutter their homes, this is a huge turnoff to a prospective home buyers.

What’s fine for living is not always fine for selling, sellers and selling agents alike should want to portray a lifestyle that people can relate to and aspire to. You have to have them fall in love as soon as they walk in the door.

As the market has switched directions and the numbers of able-and-willing buyers has dropped, home sellers are turning to staging consultants to give their properties that extra oomph to impress and compete in the buyer’s market. Relatively inexpensive staging has proven to turn the tables for homeowners itching to sell.

People buy on emotion; generally speaking people want to imagine having a grander lifestyle. We like to think that we’re going to live in a beautiful, always-clean home and that we’re going to entertain a lot, so being able to portray that to a potential buyer can be a determining factor in their decision. When a buyer comes in the door, they need to be able to see themselves in that place.

A few tips to consider are; organize, repaint in neutral colors, open the space by keeping furniture and trinkets to a minimum, take out family pictures and treasures, and most importantly make sure it’s spotless. Keeping in mind that “less is more” can help in situations where an inexperienced seller might question particular spaces.

Get rid of stuff. It can’t be said enough how important it is to declutter your home. Most people accumulate things like furniture, pictures, vases, vacation mementos and other knickknacks and then find places for them in the home, rather than taking something out. Most people don’t even really notice how much clutter they have because they have learned to live with it. But really, is there any better time to purge than when you move? Consider it a head start on packing.

You have to know your environment and what people will be looking for

A vacant home is nothing more than an empty shell and buyers have very little imagination. An empty room either looks too small or too overwhelmingly big for a buyer’s furniture. Create the space for them.

Even if the buyer is single, he or she is likely to bring an entourage with them when their inspecting the home, so be sure the hallways and walkways are big enough for three, even four people to be in at one time.

Rooms posed well for good photo shoots are becoming a must in home-selling because buyers get a first peek at your home on the Internet. The time that people actually have to spend physically looking at properties is very limited.

Investor Buying and the Housing Market Today

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Tue, 06 Dec 2011 12:37:25 -0800

It’s no surprise that low home prices and a strong demand for rental properties are causing a surge in investor buying. This in turn has driving up the market share of homes purchased by investors.

According to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, investor purchases hit 22.3 percent of closed transactions for the month of October, up from just 19.6 percent as of July. During the past three months, investor involvement has surpassed 20 percent, continuing a long-term trend of increased investor interest in the housing market.

According to a recent article by Susanne of RIS Media “All-cash sales accounted for 29 percent of purchases in October, little changed from 30 percent in September and 29 percent in October 2010; investors make up the bulk of cash transactions”.

The National Association of REALTORS also stated recently that in its survey, “investors purchased 18 percent of homes in October, compared with 19 percent in September 2010”. Furthermore the article states that “First-time buyers accounted for 34 percent of transactions in October, up from 32 percent in September; they were 32 percent in October 2010”.

“Due to a combination of low home prices and growing demand for rental units, purchasing damaged Real Estate Owned, fixing up the properties, and then collecting monthly rents, can be an attractive financial play, the Campbell survey reported. In October, average prices for damaged real estate averaged $101,100, the lowest price recorded in two years. Home prices for non-distressed residential properties averaged $266,700 in October. Similar to recent months, there has been an increase in purchases for damaged real estate”, Stated Susanne.

According to susanne “in some areas we’re hearing about shortages of foreclosure inventory in the lower price ranges with multiple bidding on the more desirable properties,” says NAR Chief Economist Lawrence Yun. “REALTORS® in such areas are calling for a faster process of getting foreclosure inventory into the market because they have ready buyers. In addition, extending credit to responsible investors would help to absorb inventory at an even faster pace, which would go a long way toward restoring market balance.”

The demand for rental property remains robust. Campbell Surveys approximates that 61.6 percent of investor properties bought during the month of October will be rented out.

It’s interesting to watch the current conditions in the market change so rapidly; because so many investors are purchasing homes to rent until the market turns around, they seem to be the target market presently. This makes me wonder though how we could appeal to possibly new home buyers; I know that for my team we push every day to come up with new and innovative ways to appeal to a broader market.

What are some ways that have maybe worked for you to appeal to a greater client base in these uncertain economic times?

Does Your ‘People Pleaser’ Pattern Get in the Way?

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Wed, 30 Nov 2011 17:10:40 -0800

RISMedia, May 28 2011—Do you find yourself avoiding certain types of clients? Do you find yourself unable to speak the truth to sellers when their properties are overpriced? If you’re like most real estate professionals, your “people pleaser” pattern often gets in the way of telling the truth. When you’re not able to tell the truth to your sellers, they lose respect for you, and you end up losing the transaction.

This is similar to a client of mine, named Pauline, who was unable to reach her financial goals because she only wanted to work with buyers. When I probed into what was blocking her, she said that she really didn’t like the idea of working with sellers. In fact, her dislike was so great that she actually avoided speaking with sellers.

When I asked her why, she said it was because they would be demanding. They wouldn’t price their homes at the right number; they would expect her to spend a lot of money to sell their house; they would really pressure her and create a lot of stress for her.

I asked her why it was that she gave her power away to these people instead of setting appropriate boundaries. I asked her why she wasn’t able to tell them the truth about the price of their homes. With a little prompting and encouragement, she discovered that she had been suffering from a very strong people pleasing pattern her whole life; it showed up in different areas.

In this case, it showed up whenever she thought about working with a seller. In her interactions with sellers, she gave her power to them; she let them control the situation; she let them set the price; she didn’t set appropriate boundaries. In fact, she ignored one of Stephen Covey’s basic rules, which is, “It’s either win/win or no deal.” For her, in every situation with a seller they won and she lost.

When we explored her people pleasing pattern a little bit deeper to find its origins, we found it began very early in her life. In fact, as a very young child, her only way of getting any attention was to be a family “people pleaser.”

I pointed out to her that that was probably a good strategy at the time, but like a program that you install your computer, it will need to be updated or eventually replaced. I asked her if she would finally like to change that old “people pleaser” pattern, and she agreed.

Coming back to her current age, she realized that if she kept on being a “people pleaser,” she would not be able to fulfill her potential or make the money she needed, and she would constantly be stressed out.

With a very short technique, I introduced her to the idea of releasing her “people pleaser” pattern once and for all. When she did that, she felt much lighter. And then I asked her to come up with a list of empowered beliefs, and she created this list: “I just need to please myself, and no one else.” “I don’t need people to like me; I just need people to respect me.” “It’s either win/win or no deal.” “The only person’s approval I need is my own.”

Those new empowered beliefs allowed her to take her power back. It gave her the ability to tell the truth. My general comment to all real estate professionals in today’s market is that above all, be honest. When you’re working with a prospective client who is a seller, be sure that they are willing to price their home at the price point that you advise them.

If they insist on an unrealistic price, do not work with them; you would only be engaging in an interaction in which they would win and you would lose. Keep in mind Stephen Covey’s famous principle from his book, The Seven Habits of Highly Effective People; it’s either win/win or no deal.

Trust your gut; you’ll know if it’s not a win for you. Your job is to let it go and trust that you’re making room for a wonderful, new, ideal client.

Posted By susanne On May 28, 2011 @ 12:04 am In Best Practices,Business Development,Marketing,Real Estate,Real Estate Training,Real Estate Trends,REALTOR Marketing,Today's Top

What Does it Take to Effectively Conduct Business?

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Tue, 15 Nov 2011 17:12:34 -0800

I came across an interesting article a few days ago and I thought it was interesting some of the observations author Jose Perez made. The article was an overview of how to do business in the current real estate market. Perez mentioned how “If it used to take 30 days to get a transaction closed, it now takes 120 or more, If it used to take 20 contacts to get someone to listen to you, it now takes 100 or more, and If someone was inclined to do business with you before, they are now inclined to make sure they are getting the best deal regardless of their relationship with you.” I found all of these characteristics in doing business to be very important given our current economic state.

The current market is very different for clients than before. As a result, you must recognize this and change the way you approach sales, or you are likely to never establish a client connection.

Clients aren’t willing to be sold. Perez explains “There are a variety of reasons for this all borne from the harsh economic realities we are living through. With all the negativity surrounding us every day, consumers are thinking any financially impactful decision through much more thoroughly than they ever have.” In other words they are taking much longer to commit and even clients willing to consider buying in this market are far more cautious.

Perez offers some suggestions to increase sales which include: Don’t sell, help, don’t close, advise, Don’t push, encourage, become completely indispensable.

It’s a totally different mindset but one that must be adopted in order to stay relevant, no matter how counterintuitive it might be to the most hardcore of salespeople. Furthermore, besides the economic reasons driving this necessity to change your approach, today’s online consumer also doesn’t want to be pushed.

Perez also offers solutions to engage consumers online: “We blog about interesting topics that will position us as thought leaders, we post interesting articles, videos, etc. that provide engaging and relevant information, we allow the online consumer to interact with us without forcing them to make a decision…they control the process and call the shots.”

These same practices should be taking place in our meeting with potential clients or current ones. The more appeal to someone’s needs and assist them in understanding their situation and cost involved, the more we can prove to be an indispensable resource in helping them examine their position. In achieving such a task for our client, more times than not the consumer will be inclined to do business with us when they are ready to make a step toward purchasing real estate.

Homeowners Opt for 15-year Fixed-Rate Loans

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Tue, 08 Nov 2011 19:26:19 -0800

I found this article online and thought it was worth sharing and discussing:

Consumer money resource Bills.com recently released its 2011 Third Quarter Mortgage Report. Driven by an increased demand for refinance loans, consumer traffic to the company’s mortgage tools and calculators more than doubled from the second quarter.

The majority of homeowners preferred 15-year fixed-rate loans as a way to combine lower interest rates with the stability of a fixed-rate product. Consumers in this quarter were also more accurate in estimating both their credit score and the value of their homes.

“Homeowners are actively seeking out the sweet spot between long-term stability and the lowest possible interest rate,” says Ethan Ewing, president of Bills.com. “Fortunately, current market conditions make it possible to lock-in that stability and secure very low rates and payments.”

The Bills.com Quarterly Mortgage Report aggregates user data and choices from its mortgage recommendation engine and various mortgage calculators and tools. Requests for refinance information made up nearly 90% of the traffic to the Bills.com Mortgage Help Center tools in the third quarter of 2011.

Findings include:
• 39% of borrowers in Q3 said the lowest possible interest rate was the most important factor in choosing a loan, versus 41% in Q2
• 23% of borrowers in Q3 said the lowest possible monthly payment was the most important factor in choosing a loan, versus 21% in Q2
• 76% of consumers in Q3 preferred a higher, fixed rate to a lower, variable one
• 72% of borrowers in Q3 plan to remain in their homes for more than 7 years

Most requested loan products for Q3, in order:
• 34% preferred 15-year fixed loans, down from 38% in Q2
• 32% preferred 30-year fixed loans, up from 26% in Q2
• The percentage of borrowers who preferred 5/1 adjustable rate mortgages remained consistent at roughly 14% between Q2 and Q3

The report also gauged the accuracy of homeowners or new borrowers in rating their own credit score and assessing the value of their own home.
• In Q3, homeowners underestimated the value of their home by an average of $11,145, compared to an average difference of $19,645 in the previous quarter
• While the large majority of visitors in Q3 had an excellent credit score (740+), roughly 32% of them incorrectly stated their score as only “very good.”

For more information, visit www.Bills.com ^[2]. Posted By susanne On November 8, 2011 @ 4:09 pm In Consumer News and Advice,Finance and Economy,Financing a Home,Real Estate News,Real Estate Trends,Today's Top Story - Consumer

Active First Time Homebuyers, Despite Skepticism

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Fri, 04 Nov 2011 16:08:41 -0700

First-time buyers are out and active, buying houses at nearly the same pace as they were before the first-time homebuyers credit first stimulated demand two years ago.

So far this year the first-time buyer market share has been quite steady, ranging from 32 to 36 percent of existing home sales through the spring and summer buying season, according to a survey conducted by the National Association of Realtors.

A survey of real estate brokers, found that the first-timer market share has varied 35 percent in January to 37.7 percent in August. First-time homebuyer share of short sales hit a peak of 54.1 percent of all short sale transactions in November 2009, just before the originally-scheduled expiration of the federal homebuyer tax credit.

Today’s 32 to 38 percent range is not far below the 40 percent market share first-time buyers had in 2003 & 04, before the boom drove prices out of reach of man or the tax credit created an artificial, temporary demand.

Regardless of the fact that first-time homebuyers are burdened with higher down payments, harder credit requirements and mortgage approval delays, those have not proven to be deal breakers.

First-timers have found ways to deal with higher down payment requirements. FHA’s 3.5 percent down market share has risen from 3 to 30 percent since 2006, even with tighter credit criteria and higher fees that took effect a year ago, FHA remains the financing of choice for most first time buyers. Moreover, rents are rising and rental choices are dwindling as vacancy rates rise.

So why aren’t first-timers buying more than they are? Fannie May’s recent National Housing Survey can help answer that question. Future outlooks rather than current realities are keeping buyers at home.

September’s survey showed a marked decline in consumer expectations of home prices over the next year-their weakest outlook since monthly tracking began in June 2010. Consumers simply continue to demonstrate very negative outlooks. At the same time, the share of consumers expecting mortgage rates to go up dropped sharply to the lowest level we have recorded, likely influenced by the news that the Federal Reserve will attempt to keep interest rates low for years to come.

The absence of a sense of urgency to buy homes, given prospects for further drops in home prices and continued low mortgage rates, joined with general doubt regarding their own personal finances and the economy, makes for a slow recovery of the housing market.

Down payments and homeownership

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Thu, 03 Nov 2011 18:18:29 -0700

Even with the current economic climate, homeownership is more reasonable than ever, thanks to low interest rates and lower home values. For buyers who manage to have a twenty percent down payment, they believe this will get them the lowest monthly mortgage expense. However, simply because buyers can afford to put down this amount does not necessarily mean they should.

Buyers who have saved enough to put 20% down on the purchase of a home may want to consider maintaining some of their cash for savings, investing or other purposes. It may sound counterintuitive, but with today’s interest rates and the competitive pricing of private mortgage insurance, borrowers can retain some of their money by putting less money down on a home and still get a low monthly payment.

Real estate professionals have a responsibility to all home buyers to help them evaluate their purchasing power. The right advice can help home buyers control their current assets while keeping sufficient reserve for any other possible financial needs.

Being a real estate expert, you are perfectly positioned to lead prospective home buyers throughout the transaction process. At the very beginning, it is vital to look at the borrower’s overall financial picture. The home buyer as well as the real estate professional should take into consideration current cash flow, debt and all future financial obligations.

Help your borrower think beyond just their interest rate and down payment, as these are not the only keys to securing the lowest possible mortgage payment. By having a general understanding of the current financing options, you can better understand what your buyer can responsibly afford, which, in some instances may be more than they think.

While you are not a financial advisor, by asking these types of questions, you can help make sure your buyers better frame conversations with their loan officer, in return, increasing the value you bring to the table and the likelihood of a constructive outcome for all parties.

For those potential buyers who have stayed out of the market over worries of declining property values, they can still purchase a home without funneling all of their available cash into the downpayment. By utilizing this strategy, home buyers are able to leverage their current assets, while still keeping a satisfactory cash reserve.

Putting 20% down on a home doesn’t always hold logic, but purchasing at a time of high affordability does. And by understanding the current financing options available to buyers, and helping them discuss what those options mean for their down payment needs or monthly payments, you can help point them in the right direction with their loan officer, overcome their investment fears and make the sale, all while assisting them realize long term goals.

Improved Investor Returns with Rising demand for Rentals

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Tue, 01 Nov 2011 15:58:47 -0700

With rents rising faster than last year, the picture for residential real estate investors is getting even better than it already was as a result of once-in-a-generation prices and low interest rates for investors and real estate professionals.

We need to address concerns over near term price declines and urge investors to take a long view of the opportunities.

This is a long term investment differs with the “get rich quick” approach to investing. Rents are a steady return on your investment through the years, leaving you with an attractive asset when prices improve. And they will. The best profits in real estate accrue to long term investors who take a long term view.

With 1.4 million new renters this year, you can see why apartment construction can’t keep up with demand. Tenants, especially former homeowners forced from their homes because of the economy, are increasingly turning to single family homes owned by investors, especially in high foreclosure markets.

During this year, investors have accounted for between 20 and 40 percent of monthly existing home sales, according to surveys of Realtors by Campbell/Inside Mortgage Finance and the National Association of Realtors. Yet, the investor market share may increase even more next year.

A recent survey found that by a three to one margin, investors plan to be more active in their local markets compared to typical homebuyers in the next 24 months, and 69 percent of investors say it’ll be easier to find properties in the near future.

Most investors are newcomers. Fifty-nine percent (59%) said they’re new to real estate investing, with 33.5 percent considering their first investment purchase and 8.5 percent in the process of buying and selling their first investment property. Another 17 percent said they just completed their first transaction and plan to make more. Only 36.5 percent have experience in more than one property transaction.

Owning real estate has was always been better than not owning real estate. Holding real estate for the long term has always been a formula for success and most family wealth has been accumulated by purchasing real estate and keeping it in the family for many generations. Real estate plus time usually equals success.

There are an estimated 6 million people who went from being owners to being renters, those people are not removed from the housing market, but simply relocated.

Living Expenses, Rent v. Buy

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Wed, 26 Oct 2011 13:12:45 -0700

It’s no secret that the real estate market is rapid changing and adapting to our new economic state, however I recently found an article that I found interesting about home occupancy, more specifically the divide between renters and owners. Renters now spend five percent more of their household budgets on housing costs than do homeowners. This difference is growing due to the rise in prices of rentals.

Since 2005, homeowners’ expenditures for housing approximately rose from 31.9 percent of their household budget to 33.2 percent, but renters’ costs have risen even more, from 35.6 percent to 38.4 percent, according to the October CoreLogic U.S. Housing and Mortgage Trends.

Homeowners have increased their housing expenditure allocation by 12 percent since 1985, while renters increased by 22 percent.

As consumers begin distributing more and more of their expenditures toward housing, they have less money to spend on non-housing consumption. The major decline in a household’s budget occurred in transportation costs which fell by 17 percent and 22 percent since 1985 for homeowners and renters, respectively.

The increased spending allocation for housing, which is largely due to the stagnation of incomes among Americans of home buying age beginning in the 1990s, has actually contributed to the decrease in homeownership by making buying a home more difficult.

Demographics have also contributed to the decline in homeownership. For the 25 to 34 age group, the homeownership rate fell from 51.6 percent in 1980 to 42.0 percent in 2010. For 35 to 44 year olds, homeownership rates fell from 71.2 percent to 62.3 percent over the same time period.

Also noteworthy numbers of foreclosures are remaining on the market for as long as four years or more. One out of five foreclosures (21 percent) is taking more than a year to sell. Nearly 10 percent, or 23,200 properties that were auctioned in 2006, remained in REO as of Q2 2010. In other words, these properties have been in REO constantly since 2006.

I found these statistics to be very interesting, considering other trends that have recently taken place in the market. What’s your opinion about the ratios around renters vs. owners?

Slower Months Ahead, But Still up From a Year Ago

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Mon, 24 Oct 2011 14:07:43 -0700

According to the National Association of REALTORS, existing-home sales were down in September compared to that of August, yet remain well above a year ago.

Total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, declined 3.0 percent to a seasonally adjusted annual rate of 4.91 million in September from an upwardly revised 5.06 million in August, but are 11.3 percent above the 4.41 million unit pace in September 2010.

Existing-home sales have bounced around this year, staying relatively close to the current level in most months, though what can be frustrating is affordability conditions have improved to historic highs and more creditworthy borrowers are trying to purchase homes. That being said the share of contract failures has double the level of September 2010. Even so, the volume of successful buyers is higher than a year ago and is remaining fairly stable.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.11 percent in September, down from 4.27 percent in August; the rate was 4.35 percent in September 2010.

Many creditworthy home buyers are being denied mortgages. On top of that, loan limits have been lowered, which means buyers of higher priced homes, including many in more expensive housing markets, now have to pay a higher interest rate for a jumbo mortgage than buyers who can qualify for a conventional loan.

All-cash sales accounted for 30 percent of purchase activity in September, up from 29 percent in August and 29 percent also in September 2010; investors make up the bulk of cash purchases. Investors purchased 19 percent of homes in September, down from 22 percent in August; they were 18 percent in September 2010. First-time buyers accounted for 32 percent of transactions in September, unchanged from August; they were also 32 percent in September 2010.

Total housing inventory at the end of September declined 2.0 percent to 3.48 million existing homes available for sale, which represents an 8.5-month supply at the current sales pace, compared with an 8.4-month supply in August.

Regionally, existing-home sales in the Northeast rose 2.6 percent to an annual level of 790,000 in September and are 6.8 percent above a year ago. Existing-home sales in the West fell 8.8 percent to an annual pace of 1.14 million in September but are 10.7 percent higher than September 2010. The median price in the West was $207,400, which is 4.5 percent below a year ago.

We’ve all been experiencing that the market has been stable… although at low levels, and there is plenty of room for improvement. We need to remove the roadblocks to a housing recovery and not place more obstacles in the way of financially qualified buyers and ultimately, unless Congress reinstates the higher limits, the overall housing market recovery will be slower than it otherwise could be, and will hold back the broader economic recovery

Short Sales & First Time Home Buyers

Eric Harlington (PrimeLending, Plains Capital Bank Company) — Wed, 05 Oct 2011 13:34:15 -0700

First-time home buyer interest in short sales have been severely discouraged recently due to processing delays, according to the latest Campbell/Inside Mortgage Finance Housing Pulse Tracking Survey. It is estimated that short sales account for more than one of every six house sales.

The amount of short sales purchases by First-time home buyers has dropped to 39.7 percent of short sale transactions in August. August of 2011 represented the lowest level for first-time home buyers ever recorded by the Housing Pulse survey.

The first-time home buyer share of short sales hit a peak of 54.1 percent of all short sale transactions in November 2009, just before the originally-scheduled expiration of the federal homebuyer tax credit.

Short sale transactions have long been problematic for buyers and sellers alike, with typical approval times of several months after a homebuyer first submits an offer. Factors slowing down short sale approvals include lost paperwork, coordination with multiple investors, slow appraisals, and mortgage servicer understaffing.

Still, for many first-time home buyers, average short sale prices of 27 percent lower than non-distressed properties compensated for the wait time. But with average time-on-market for short sales stalled at 16.6 weeks—with the majority of that time spent waiting for short sale approval—short sale transactions are becoming less popular with first-time home buyers.

Short sales are just one type of distressed property, with damaged REO and move-in ready REO also being significant components of today’s housing market. In August 2011, short sales accounted for 17.1 percent of the home purchase market, with damaged REO and move-in ready REO accounting for 13.2 percent and 15.6 percent, respectively.

The total proportion of distressed property, as represented by the Housing Pulse Distressed Property Index, fell to 45.9 percent in August from 46.2 percent in June.

From this we can see why it’s not surprising that home buyers are becoming frustrated with short sale delays, and what we’re finding is this is causing them to resort to placing offers on multiple properties. As we know, this practice can bog down the short sale approval process for mortgage servicers.

So what are some creative ways maybe you have discovered to ease this process for the home buyer?