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By Melissa Dittmann Tracey, REALTOR® Magazine
When tackling home remodeling projects, you’ll find some projects pay off more than others at times of resale. Remodeling Magazine, in conjunction with REALTOR® Magazine, recently released findings of its annual Cost vs. Value report for 2011-2012, revealing which remodeling projects offer the biggest bang for your buck.
Overall, the trend right now is replacement over remodeling–swapping out the old for the new rather than doing a total gut job, which can be much more costly.
This year’s Cost vs. Value report found that exterior replacement projects–such as new garage doors and a new entry door–offer some of the best returns at resale, allowing home owners to recoup close to 70 percent or more of the costs of the project at times of resale.
The following are the top, mid-range projects from this year’s report, based on what home owners stand to recoup at time of resale:
1. Replacing the entry door to steel
Estimated cost: $1,238
Cost recouped at resale: 73%
2. Attic bedroom (converting unfinished attic space into a bedroom with bathroom and shower)
Estimated cost: $50,148
Cost recouped at resale: 72.5%
3. Minor kitchen remodel (including new cabinets and drawers, countertops, hardware, and appliances)
Estimated cost: $19,588
Cost recouped at resale: 72.1%
4. Garage door replacement
Estimated cost: $1,512
Cost recouped at resale: 71.9%
5. Deck addition (wood)
Estimated cost: $10,350
Cost recouped at resale: 70.1%
6. Siding replacement (vinyl)
Estimated cost: $11,729
Cost recouped at resale: 69.5%
Housing Crisis to End in 2012 as Banks Loosen Credit Standards
01/24/2012 By: Krista Franks
Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.
The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.
However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.
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 Many sellers want to wait until the spring before putting their home on the market. This might be for any of several reasons:
- They don’t want to be inconvenienced during the holiday season.
- They believe that they will see more potential buyers and as a result will get a higher price.
- In the northern part of the country, they might not want people walking through the snow and then into their house.
- All of the above
In a normal real estate market, this may make sense. However, this market has been anything but normal. This spring will also see some abnormalities. The biggest difference will be the direction prices will take.
In years past, the spring market would favor the seller because increased demand would outpace any increase in supply: the number of houses coming onto the market would not be as great as the number of buyers newly entering the market. In most situations, when demand is greater than supply, prices increase.
The reason this spring will be different is that the supply of homes coming to the market will be dramatically impacted by foreclosure properties being released by the banks. Many believe this increase in inventory will far outweigh buyer demand. In situations where supply is greater than demand, prices decrease.
Will This Actually Happen?
RealtyTrac, in their latest foreclosure report, explained:
“U.S. foreclosure activity has been mired down since October of last year, when the robo-signing controversy sparked a flurry of investigations into lender foreclosure procedures and paperwork. While foreclosure activity in September and the third quarter continued to register well below levels from a year ago, there is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up.
This will impact prices.
What Do Experts Believe the Impact Will Be?
Here are the pricing projections by several major entities:
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Zillowbelieves we will not see a bottom in prices until the first quarter of 2012.
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Standard & Poorsthinks prices will drop %5 in the next few months.
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JP Morgan Chasebelieves prices will depreciate 6 to 7% over the next six months.
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Barclays says prices will fall 7% by the end of the first quarter of 2012.
Bottom Line
You may pay a hefty price for the convenience of not having your property on the market right now.
Learn the rules of Fannie Mae before buying a home from the agency
Looking to buy a home from Fannie Mae? You’d better hurry. According to its most recent SEC filing, only 135,719 single-family properties were in Fannie Mae’s inventory at the end of June.
Fannie Mae, which ended up with hundreds of thousands of homes as residents struggled to keep up with their mortgages in recent years, is looking to sell them with incentives for buyers.
During the six-month period ending June 30, 2011, Fannie Mae acquired 107,246 homes through foreclosure but disposed of 134,016 homes.
Homes acquired by foreclosure or similar means are referred to as real estate owned (REO).
The pipeline of REO has remained relatively flat. The seriously delinquent rate for Fannie Mae mortgages was constant at 4.08 percent between June and July.
Of the homes sold, the vast majority were sold to homebuyers in individually negotiated transactions versus bulk transactions sold to investors.
Some homebuyers and investors are interested in buying Fannie Mae homes because the company offers favorable terms, but you must factor into your offer price the additional costs of conducting an inspection, title search and surveys.
Fannie Mae does not directly sell homes; it only sell homes through real estate brokers. Fannie Mae lists its homes on a Web site called Homepath.com. That site is easily searchable by state, town, Zip code, price, number of bedrooms or baths; it provides detailed information about the listings and the listing agent’s contact information.
If you find a home you are interested in buying, you can contact the listing agent directly. If you are already working with a buyer-broker, he or she can contact the listing agent on your behalf. But buyer beware: Buying a Fannie Mae home is different than a traditional private sale.
Fannie Mae’s homes are available to owner occupants as well as investors. Owner occupants are buyers who certify that they will move into the home as their principal residence within 60 days from settlement and remain in that home as their principal residence for at least one year. Fraudulent owner occupant certifications may result in loss of your earnest money deposit and a $10,000 penalty. Owner occupants are encouraged by a program called the “First Look” system, which provides that for the first 15 days of the listing, only offers from prospective owner occupants will be considered.
After the First Look period expires, anyone, including investors, can submit an offer on that home. Prospective home buyers may also be able to take advantage of Fannie Mae-approved lenders offering favorable mortgage loans for the acquisition, as well as the renovation of the REO. Twenty-eight approved lenders and six approved home renovation lenders are in Washington, D.C. The state-by-state list of those approved lenders is available online.
Until Oct. 31, Fannie Mae is also offering additional incentives, such as offering 3.5 percent cash credit toward buyer’s closing costs and a $1,200 bonus payable to the selling real estate agent.
Once you find a home that you would like to buy, you must submit a written purchase offer through a licensed real estate agent. Fannie Mae will consider standard contract contingencies such as financing, appraisal or home inspection. Although there is no specific contract language that you must use, you must submit a specific 13-page Fannie Mae addendum, which is available online. Prospective buyers must read and understand the terms and conditions of that addendum. They are well advised to consult with a real estate broker or real estate attorney to explain the legal implications of this addendum.
This addendum eliminates virtually all of the protections that are usually afforded to a home buyer in a conventional home purchase.
Since Fannie Mae has acquired its REO from distressed homeowners and has never actually occupied these homes, the agency sells them in “as-is” condition.
Many of the homes Fannie May acquires are not even in saleable condition and must undergo repairs before Fannie Mae will even market them for sale.
Even when Fannie Mae makes basic repairs sufficient to make the home saleable, those repairs are not warranted or guaranteed in any way.
Fannie Mae also expressly disclaims any liability for latent defects, such as mold.
Consequently, home buyers need to conduct rigorous inspections. Those inspections should include a comprehensive home inspection — including termite, radon and, if applicable, specific fireplace, well and septic inspections.
Fannie Mae does not generally warrant the title to the property and discloses that its sales may be subject to further court review or even redemption by the former homeowner. So a full title search and a full boundary line survey should be undertaken to discover if there are any title or survey problems.
Fannie Mae housing may allow you to buy a home on favorable conditions, but you must also consider the cost of conducting any deferred maintenance — and making any repairs to make your new house a dream home.
Harvey S. Jacobs is a real estate lawyer in the Rockville office of Joseph, Greenwald & Laake. He is an active real estate investor, developer, landlord, settlement attorney and lender. This column is not legal advice and should not be acted upon without obtaining your own legal counsel.
 Late last year, banks were warned that they needed to guarantee that the paperwork necessary to start a foreclosure process on a family was both accurate and complete. Since then, the banks have slowed down the foreclosure process while they re-examined their procedures. They are now confident that all the required documentation is in order. We are currently waiting on a settlement between the banks and the state attorneys general which will establish what penalties will be assessed.
Once this settlement is reached, the banks will again move forward on many homes which are currently stalled at some stage in the foreclosure process.
How many homes are we talking about?
There are millions of homes in this category. Calculated Risk quantified the situation:
“There are a large number of seriously delinquent mortgage loans in limbo waiting for this settlement. According to LPS, at the end of August there were about 1.87 million loans seriously delinquent and another 2.15 million loans in the foreclosure process. This is only down slightly from a year ago when 4.4 million loans were seriously delinquent or in-foreclosure. Once the settlement is reached, the pace of foreclosures will pick up sharply.
The pace will “pick up sharply”.
Bottom Line
As more foreclosures come to the market at discounted prices, there will be greater downward pressure on all housing values. Waiting for the spring selling season to put your house on the market may not make sense this year. The increase in demand may be overshadowed by an increased supply of distressed properties.
With three or four months of hibernation right around the corner, you think that you might be nervous about what things are going to look like when the alarm clock finally sounds off come spring? The truth is that shoring up our homes in autumn is an important preventative step in warding off major repairs when spring time rolls around again, and the best way to do that is to keep up on your basic fall maintenance tasks. After doing a little research, here's some advice from the experts on what to focus on...
Know Your Climate
"Obviously (fall maintenance chores) are going to vary, depending on where you live," says Jennifer Gillon, owner of Mr. Handyman in Orlando, Florida, who stresses that homeowners need to get familiar with their own regional needs before they write up a schedule for their fall fix it weekend.
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Hire a Chimney Sweep—Gillon puts a chimney cleaning towards the top of her fall maintenance list, a designation with which State Farm Insurance Company agrees. After all, soot and other deposits, especially creosote buildup inside your chimney pipe, can turn your average chimney into a fire risk that would make Smokey the Bear cringe.
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Inspect and Test Carbon Monoxide Detectors—Following along that same vein of thought, State Farm Insurance and Smokey the Bear also note that fall is the best time to service your smoke detectors and carbon monoxide alarms, since furnaces and fireplaces are a common source of dangerous carbon monoxide fumes, and a potential source of residential fires as well.
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Improve Insulation, Including Caulking and Sealing—If, like Mamma Bear, you're looking for ways to keep your bowl of porridge hot a little bit longer, you might want to consider investing in a fall insulation upgrade. "Insulation is a key opportunity in the fall," says Gillon, noting that even minor upgrades, such as caulking and sealing around windows and doors, can make a big difference when it comes to reducing home energy costs, and enjoying a more comfortable home.
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Lawn Maintenance—Most homeowners are ready to write off their lawns when the leaves start turning, but experts suggest that the opposite is in order. Talk to any greenhouse or nursery, and they'll tell you that fall is prime time for planting new grass seed, aerating your yard, and laying down fertilizer. It's also a good time to run any gas-powered lawn tools, such as lawn mowers and weed whackers, out of gas for winter storage.
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Check Plumbing—The worst possible thing that you could wake up to come spring is the nightmare of busted pipes. If your plumbing runs through areas at risk of freezing, such as an uninsulated garage, or beneath a mobile home, State Farm recommends that you wrap your pipes with heat tape, and insulate before the weather turns cold.
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Trim Trees—It's true that bears don't usually trim trees. Instead they climb them or use them as backscratchers. Nevertheless, Gillon is quick to point out that "fall is a good time for pruning and trimming trees, especially up north where they can bring down power and phone lines in big winter storms." In fact, it's a good idea no matter where you live, since pruning in fall is one of the best times for a tree when it comes to quick recovery times and reducing the tree's chances of contracting disease.
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Gutter Cleanings—Regardless of where you live, fall is an important time to clean out your gutters. Poorly functioning and clogged gutters can lead to a host of problems, including water damage to roofing, soffits, fascias, and siding, as well as more serious problems involving your home's foundation. And when you throw cold climate issues like ice damming and dangerous ice buildup into the mix, this is one fall maintenance task that it bears paying attention to.
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Spruce Up the Outside—Fall is a great time for sprucing up the outside of your home, since time will be short for that kind of thing when winter arrives and the weather gets colder. Gillon recommends focusing on chores like touching up your home's exterior paint, staining and treating decks, and pressure washing your home's decks, driveways, paths, and patios.
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Service Heating Systems—Perhaps the smartest maintenance chore you can do is hire an HVAC technician to come in and service your furnace, boiler, or other home heating system before the weather turns cold. "It's something that we recommend everybody have done," says Gillon. Why? Not only is an annual service check your best guarantee against going cold when winter hits, an annual tune-up also ensures that your heating system runs at peak efficiency, which saves you money on heating costs over the winter.
It's true, most of us don't have to worry about our homes falling to pieces while we hibernate until spring. That said, the value of keeping up on home maintenance tasks can't be understated. If you've been putting off your fall repair list, it's time to get to it!
Windows of Opportunity Beginning to Close for Sellers
 We have suggested that sellers who need to sell within the next 18 months had a ‘window of opportunity’ to sell at higher prices. They needed to put their houses up for sale immediately before a flood of distressed properties were introduced to the market. This window is beginning to close. The paperwork challenges faced by banks that caused a delay in the foreclosure process over the last ten months are starting to clear. It seems that these houses are now coming to the market.
RealtyTrac reported in their September Foreclosure Report:
“Default notices were filed for the first time on a total of 78,880 U.S. properties in August, a nine-month high and a 33 percent increase from July — the biggest month-over-month increase since August 2007.”
James Saccacio, chief executive officer of RealtyTrac explained:
“The big increase in new foreclosure actions may be a signal that lenders are starting to push through some of the foreclosures delayed by robo-signing and other documentation problems. It also foreshadows more bank repossessions in the coming months as these new foreclosures make their way through the process.”
Diana Olick, of CNBC’s Realty Check quoted a spokesperson for Bank of America:
“ Strong gains like that from July to August demonstrate our progress – primarily in judicial states — clearing more volume to advance to foreclosure once we pass the numerous quality controls we have in place and exhaust all options with homeowners.”
The impact will be felt from coast to coast. New Jersey Superior Court Judge Mary Jacobson recently cleared the way for the top banks to resume foreclosures in the state. The impact this will have on the number of distressed properties can be clearly seen in these statistics reported by Housing Wire:
“In October, New Jersey had the 24th highest foreclosure rate in the country, with servicers filing roughly 5,200 foreclosures that month, according to RealtyTrac. By July, the Garden State’s foreclosure rate dropped to 42nd with just 1,112 filings last month.”
ForeclosureRadar, which handles research in California, Oregon, Washington, Arizona and Nevada, last week reported:
“Foreclosure starts rose in every state.”
Bottom Line
If you currently are selling your home, price it to compel a buyer to purchase it now. Waiting will cause you to compete with an increased number of distressed properties which sell at dramatically discounted prices.
Luxury and Vacation Homes Are Selling
It has been a trying time for most segments of the real estate industry. However, two areas that are showing improvement are the luxury home and vacation home markets. It seems that people in these segments are again beginning to purchase.
Vacation Homes
Last week Market Watch published an article discussing the vacation home market. Dan White, president of Daniel A. White & Associates, a wealth-management firm in the Philadelphia area, was quoted in the article.
“A lot of people are worried about the [stock] market today because of the volatility and the fact we could be going into a double-dip recession. They’re looking for other avenues. Real estate, if we’re not at the bottom [in prices], people think we’re pretty darn close.”
The article also explained some purchasers are seeing this as an opportunity to buy a vacation/retirement home:
“Some baby boomers are seizing an opportunity to get a deal on a vacation home they can enjoy now but that’s also a home that eventually will become their primary residence when they retire.”
Luxury Homes
Along with the vacation home market, the luxury market has also made a comeback. HousingWire reported on the luxury market last month:
“In the nation’s top 20 markets, million-dollar property sales rose 18% in 2010 with a 21% increase in California, said Laurie Moore-Moore, CEO of The Institute for Luxury Home Marketing, a Dallas-based firm…
In Miami, 517 properties sold for $2 million or more during the first seven months of 2011, up nearly 16% from a year earlier.”
Bottom Line
If you are in a position to move-up to the home of your dreams or have been thinking about a vacation home for the family, now might be the time to make the move.
5 Great Reasons to Sell Your House Today
We are often asked “Is the time to sell my home?” The answer to that question is based on what your families’ goals are. If you don’t need or want to move for a few years it might make sense to wait for the housing industry to recover and prices to appreciate. However, if you wish to move within the next six to eighteen months, it is probably better to sell sooner rather than later. Here are five reasons why:
Your House Will Get More Exposure Now Than the Winter
Housing sales usually level off in the summer and then regain momentum in September and October. The spring buyers’ market has passed. Don’t miss the early fall market. It has consistently outperformed the winter season.
Distressed Properties Will Impact Prices
Distressed properties (foreclosures and short sales) on the market will increase this fall and winter. This will put tremendous downward pressure on prices for at least the next 12-18 months. Get your home sold before they become your competition.
Mortgages Will Become More Difficult to Attain
Lending standards are continuing to tighten. There is legislation currently being considered that will make it even harder for buyers to qualify. Less demand will equate to lower prices.
It is the Perfect Time to Move-Up
With prices where they are and interest rates at all time lows, there may have never been a better time to move-up into your dream home. If you move into a more desirable home now, you will be in position to gain larger equity as prices eventually appreciate.
You Get to Move On with Your Life
Probably the most important reason to sell is so you can get on with your life. You are considering selling for a reason. Do not allow a less-than-stellar housing market prevent you from reaching your goals as an individual or as a family. Think about the reasons you are thinking about moving . Are these reasons really important to you? If you have to take less than you were originally hoping to get for your house, your family has a question to ask each other: Is the dollar difference in sales price worth putting off our plans? Only you and your family know the answer to that question.
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Margie Halem
Rockville,
MD
More about me…
Long & Foster, Real Estate Inc.
Address: Long & Foster Realtors , 4650 East West Highway, Bethesda, MD, 20814
Office Phone: (301) 215-6910
Cell Phone: (301) 775-4196
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