As the real estate market continues to languish, and prices continue to drop I don't see the government doing much to help. The politicians keep talking about doing something to help those that are in danger of losing their homes to foreclosure but even that seems to be going nowhere. I believe the solution is developing programs that will stimulate buying. Once that happens, prices will stop dropping and there will be fewer foreclosures because home owners will be able to sell their homes. The $7,500 tax credit program that the politicians created was pretty much useless, as evidenced by the lack of interest in it. The new $8,000 tax credit is more beneficial since the buyer does not need to pay it back if they stay in the house for 36 months.  Low interest rates are great but if the buyers can't afford the down payment, closing costs, and yearly property taxes, low home prices and low interest rates still do not get the market moving.

I know that local and state governments rely heavily on transfer taxes and property taxes to fund their various programs, but at some point they have to realize that they have pushed those taxes over the limit. People can no longer afford to buy or keep the homes they own. We are now at a point where the housing market has almost come to a stop and the government is taking in less revenue as a result. Local municipalities think that the solution is to reassess the home values higher and that will solve their revenue problem. In fact, it does just the opposite. Houses become even harder to sell, foreclosures go up as a result of the high property taxes, and the downward cycle continues. The greed and wasteful spending programs of government have forced them to continue to find new and creative ways to increase revenue. The result is what we are seeing now in all facets of our economy.

 So what is the solution? History has shown over and over again that lowering taxes actually generates more revenue as a result of increased market activity. If the federal government truly wants to get the housing market moving again it must provide the states and local governments incentives to reduce the tax burden on homeowners and home buyers. This could come in the form of payments directly to the states for each home sale or direct payments to the home buyer. The Downpayment Assistance Programs that were eliminated recently should be reinstated, with some strict credit score criteria. This program allowed the seller to contribute to a nonprofit organization that would then provide a portion to the home buyer for downpayments. When used properly, the DPA costs the government nothing and provides the critical downpayment help that can help get the home buying/selling moving again. Another approach would be to eliminate the restriction on the amount that the seller can contribute to the buyer's closing assistance. Elimination of the restriction or reinstatement of the DPA could be tied to the buyers' credit scores. A higher score would allow a higher downpayment contribution from the seller. The problem many potential buyers have is not their ability to meet the monthly mortgage payment. Rather it is the ability to come up with the outrageous downpayment and closing costs. Here in Maryland we have some of the highest closing costs in the nation.

The high closing costs and high property taxes are continuing to inhibit a positive housing market. Until this issue is properly addressed, I just don't see how the market can recover. On the other hand, if this problem can be solved, the housing sector can lead the nation out of the severe economic slowdown we now find ourselves in.

The latest REALTOR magazine has an editorial  in the Voices section talking about "sidestepping Short Sales". It inspired me to start thinking about why it takes so long to get answers from banks that are involved in short sales and why it takes months to get a decision. 

The solution for the banks seems so simple to me. I picture a desk in the lenders' office piled to the ceiling with folders for short sales. I used to manage large school picture photo labs. Every year we got busy at the beginning of the school year. I simply hired enough people to process and print the film and mail it out to the students' families. Without the right number of people doing the jobs, my desk would have looked like the desks in the loss mitigation office of the bank... piled high to the ceiling with cans of unprocessed film. If that was the case, I would have been receiving calls and receiving letters from disgruntled customers. After a while, as the piles of film expanded, I would no longer be able to even answer the calls. And if I did, I probably couldn't find the right can of film to process to satisfy the customer. Furthermore, if I was receiving letters, they would be getting lost as well, angering more people. Pretty soon the competing photo companies would be putting me out of business. 

I haven't been inside the offices of any loss mitigation clerks but I visualize that that is exactly what is happening. The piles of folders probably just keep growing as the economy worsens. In addition, Realtors stop showing the short sale houses because of the uncertainty of the process. Now the banks' financial picture is getting worse because the owners are no longer making their mortgage payments and the houses are not getting sold. It's a vicious cycle and the simple solution is to hire the right number of people, extend their hours, and delegate jobs to reduce the piles and start the money flowing into the banks and satisfying customers again. Once this starts, Realtors will begin showing these houses again and the inventory in the banks' portfolios will shrink. 

Seems like a pretty simple solution to me. But then I'm just a self employed businessman/Realtor; what do I know?

Getting your house ready to sell

It was just a couple of years ago that the Sellers held all the cards and were able to choose between multiple offers for their house. Demand was strong and supply was low. Buyers were involved in bidding wars to get the house that they wanted. They were accepting flaws in the house and even waving the home inspection in many cases to make their offer more attractive to the sellers.

 All that has changed. Everyone should realize that we are now in a strong Buyers Market. In a buyer's market the buyer holds most of the cards and can dictate the terms (within reason). Buyers now can be (and are) picky about everything in a house that they are about to buy. If they don't find what they are looking for in one house, they will move on to the next one until they find what they want.

 As a real estate professional, I walk through houses that are for sale almost every day and I am amazed at the way they are presented by the sellers. Either their agents are not giving them good advice on how to prepare the house for sale or they choose not to follow that advice. Sometimes it is a combination of both. When I see pictures in the listing in the virtual tour of the inside of the house that show junk and clutter everywhere, toilet seats up, dirty dishes on the counter or in the sink, I wonder how they expect to sell the house. Almost worse than that are the listings that have no pictures at all of the interior of the house. When most of the listings today have several exterior and interior pictures, why would a real estate agent or a seller choose not to present the house in the best possible light through multiple pictures? With the vast majority of buyers doing their initial search for a house online, pictures are essential. I personally will often skip over listings where I can't get a preview of what the house looks like through pictures. Buyers searching on their own do the same thing.

 With so many houses competing for a few sellers, your house has to stand out.

Is it worthwhile to install new carpet rather than offer a carpet allowance? A note in the remarks section of the house listing saying that a carpet allowance is being offered, is a red flag that the house is not ready to sell. The buyer will conclude that if the carpet needs replacing, there are probably other items that need fixing or replacing and they will move on to the next. In this market it is smart to replace warn carpet. You will get the investment back in being able to attract a wider audience and sell the house faster. You only get one chance to make a good first impression. Have the house ready before you put it on the market. I give all my sellers a checklist of items to clean, repair, replace prior to listing their house.

 And don't forget "curb appeal". If the house doesn't look good when the potential buyers drives up, they will never get out of the car.

 Time and money spent upfront pays off in faster sales and more money for the house when it sells.